Overview for Businesses in Great Britain

When you purchase goods up to the value of £135 from overseas, import VAT is not charged but must be declared on your VAT return. This is done automatically using reverse charge VAT.

The £135 limit applies to the total consignment value, not individual items within the consignment and excludes:

• transport and insurance costs, unless included in the price and not separately indicated on the invoice
• additional taxes and charges identifiable by the customs authorities from any relevant documents

You need to make customs declarations when importing goods. You can do this yourself or hire a customs agent or transporter to do it for you.

Before you start, make sure you have an Economic Operators Registration and Identification (EORI) number starting with GB.

HMRC guide to importing goods into the UK (opens in new tab)

1. Go to Purchases, Purchase Invoices, and select New Invoice.
2. In the Supplier field, select your overseas supplier from the list, or type the supplier name. If the supplier is not a saved contact, select Add a supplier to create a record for them.
    TIP: Make sure each supplier has the correct country set on their address and a VAT registration number where applicable. 
3. Select Apply £135 consignment rules to confirm that you’ll account for import VAT on your VAT return.
4. On the first invoice line, select a product from the list, or start typing its name to find it. If the product is not a saved item,enter a description for the item or select Create item to create a record for it.
5. In EU Goods/Services select Goods (and related services).
6. Select the VAT rate that you would apply if the purchase was made in the UK. The VAT amount is automatically set to zero and cannot be edited.
7. Repeat steps 4 to 6 on a new line for as many items as you need to add to your invoice.
8. Select Save.

The VAT return

If the VAT rate was set to standard or lower rate, VAT is reported in Box 1 - VAT due in this period on sales and other outputs and Box 4 - VAT reclaimed in this period on purchases and other inputs.

The net value is recorded in Box 7 - Total value of purchases and all other inputs excluding any VAT.

Flat Rate and Cash Accounting VAT schemes

Goods imported under £135 are outside of the Flat Rate and Cash Accounting VAT schemes.

Under the Flat Rate VAT scheme, the amount paid for the goods will appear on your VAT return.

Under the VAT Cash Accounting VAT scheme, the invoice will appear on your VAT return whether it's been paid or not.

Return to invoicing overseas from Great Britain