Import VAT on AliExpress orders to the UK: what business buyers pay and how it is collected

How does import VAT on AliExpress orders to the UK work?

Import VAT on AliExpress orders to the UK depends mainly on the value of the consignment. gov.uk's guide to VAT and overseas goods sold directly to customers in the UK explains that for consignments up to a set value sent to Great Britain, the seller charges and accounts for UK VAT at the point of sale. Above that value, the normal import rules apply: import VAT and any customs duty are due when the goods enter the UK. gov.uk states the current limit on that page.

Whether VAT shows at checkout can also depend on how the seller and platform have set up their UK VAT collection, so always look at the final total and the receipt rather than the listing price.

For an eBay seller buying stock, this means small orders usually show VAT at checkout, while larger shipments may bring a bill from the courier before delivery. Both are real costs that belong in your landed cost per unit.

This guide explains the general rules. It is not tax advice, so check your own situation with HMRC or a qualified accountant.

What happens with lower-value AliExpress orders?

For lower-value consignments to Great Britain, the VAT is collected when you buy, not at the border. You see it as part of the price or as a separate line at checkout, and the parcel normally arrives without a further VAT charge.

• The test is per consignment. gov.uk says the limit applies to the whole consignment, not each item in it.
• Transport and insurance. These are excluded from the value unless they are built into the price and not shown separately.
• Excluded goods. Excise goods and non-commercial gifts fall outside these rules.
• No small-parcel relief. The old relief that let very cheap goods arrive without import VAT has been removed for goods from outside the UK.

If you give the seller your VAT number

If you are VAT registered and give the seller a valid UK VAT registration number, gov.uk says the seller does not need to charge VAT. In Great Britain you then account for the VAT yourself under the reverse charge on your VAT return. Whether this suits you depends on how your purchases are set up, so check with your accountant before adding your VAT number to orders.

What happens with larger shipments?

Above the value limit, standard import rules apply. Import VAT and any customs duty are due when the goods are imported. For a bulk stock order this is the usual situation.

How you pay depends on the shipping method. Express couriers and postal services often pay the charges for you and ask you to pay them, sometimes with their own handling fee, before they deliver. With freight, you or a customs agent normally make the import declaration and pay or account for the charges. You need an EORI number to import goods for your business; gov.uk explains how to get an EORI number.

What decides customs duty

Customs duty depends on what the goods are and where they come from. You find the rate for a product using its commodity code in the UK trade tariff. Some goods carry no duty; others carry a rate that adds noticeably to cost. gov.uk explains how to find commodity codes. Getting the code right matters, because the wrong code can mean paying the wrong amount. If you are unsure, a customs agent or freight forwarder can help you classify the goods.

Can you reclaim import VAT as an eBay seller?

If you are VAT registered, VAT on goods you buy for your business, including import VAT, is usually input tax you can reclaim on your VAT return, as long as you hold the right evidence.

• VAT charged at checkout: keep the seller's invoice or receipt showing the VAT.
• Import VAT on larger shipments: VAT-registered businesses can often account for import VAT on their VAT return rather than paying it at the border. gov.uk explains when you can account for import VAT on your VAT return, and HMRC provides statements you use as evidence.
• Charges paid to a courier: keep the courier's invoice and ask your accountant what evidence you need for the VAT element.

If you are not VAT registered, you cannot reclaim any of it. The VAT you pay at checkout or on import is simply part of what your stock costs. Registration becomes compulsory once your VAT taxable turnover for the last 12 months goes over £90,000; our guide to the VAT threshold for eBay sellers explains the test.

How do you build import VAT into your landed cost?

Landed cost is what one unit costs you once it is on your shelf in the UK. Import VAT and duty belong in it, unless you are VAT registered and can reclaim the VAT, in which case only the duty and fees are a real cost.

A worked example

Example: suppose a hypothetical seller who is not VAT registered imports 200 phone stands by courier. All figures are invented for the arithmetic; real VAT and duty depend on the goods and their value.

In this example shipping and import charges together add about two thirds again to the supplier's price per unit, and the import VAT is the largest of the import charges. If the seller were VAT registered and reclaimed the £136.00, the real landed cost would fall to £3.46 a unit. Either way, a margin worked out from the supplier's price alone would be badly wrong.

What mistakes do sellers make with AliExpress import VAT?

Most problems with import VAT come from a handful of habits. Each is easy to fix once you know to look for it.

• Pricing from the listing price. The price on the product page is not your cost. Add shipping, any VAT at checkout, duty and carrier fees before you set an eBay price. Our comparison of AliExpress vs Amazon for eBay sellers shows how landed cost changes the picture.
• Assuming a test order and a bulk order cost the same per unit. A small sample order may have VAT at checkout, while the larger order crosses the value limit and brings import charges at the border, with different paperwork.
• Losing the evidence. VAT-registered sellers cannot reclaim VAT they cannot prove. Save the checkout receipt, the courier's charge notice and any HMRC statement together.
• Guessing the commodity code. Duty depends on the code. A guess can mean paying too much, or underpaying and owing more later.
• Undervalued paperwork. A supplier who offers to declare a low value on the shipping documents is offering to make a false declaration in your name. Refuse it, because the importer carries the responsibility.
• Treating VAT as reclaimable when you are not registered. Until you register, every pound of VAT is part of your cost.

When you compare products, run every candidate through the same landed cost sheet. If you research AliExpress products for eBay UK, the profit calculator in Dropizon Global can help you compare candidates, but enter your own import costs once you know them.

Where does eBay's drop shipping policy fit in?

These rules are about importing stock you have bought for your business. They are separate from eBay's rules on how you fulfil orders. eBay's drop shipping policy allows dropshipping from a wholesale supplier, but listing an item and then buying it from another retailer or marketplace that ships directly to your buyer is not allowed. Buying single AliExpress orders to your buyers' addresses falls into that second category. Importing stock, paying the VAT and duty, and dispatching from the UK is ordinary retail. Whichever way you work, you stay responsible for delivery and for your buyer's satisfaction.

A quick checklist

• Read gov.uk's guidance on overseas goods sold to UK customers and note the current value limit.
• Keep every checkout receipt that shows VAT, and every courier or customs charge notice.
• Find the commodity code for each product you import and check its duty rate.
• Get an EORI number before your first freight shipment.
• Include VAT you cannot reclaim, duty and carrier fees in your landed cost.
• If you are VAT registered, ask your accountant how to account for import VAT on your returns.