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A Shopify store for UK customers: VAT, delivery and returns

What a store selling to UK customers should check before launch: VAT for UK and overseas sellers, the 135 pound parcel rule and the planned duty change, delivery promises, and a short returns summary.

ESTASOFT
12 min read
Cover image for a guide to VAT, delivery and returns for a Shopify store that sells to UK customers.
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      A store that sells to UK shoppers has three jobs to get right before launch: charge and show VAT correctly, promise delivery you can keep, and handle returns the way the law expects. The rules differ if your business is based in the UK or outside it, and a change to customs duty on small parcels is planned.

      This guide is for brand owners who run a store from the UK or sell into it from overseas. We read the GOV.UK, HMRC and legislation pages on 3 November 2026 and name the page behind each fact. Dates and thresholds can change. For the wider picture of selling from the Middle East into the UK, Europe and the US, read selling from the Middle East to the UK, Europe, the US and Canada. ESTASOFT has an office in London.

      Start with where your business is based

      Almost every VAT question here has two answers: one for a business based in the UK and one for a business based outside it. Find your side first. A UK limited company with a UK address is on one side. A company registered in the UAE, Iraq or the US that ships parcels to UK homes is on the other.

      If your business is based in the UK

      GOV.UK shows a VAT registration threshold of £90,000 of taxable turnover. There are two tests. The first asks whether turnover over the last 12 months went above the threshold. The second asks whether you expect turnover to go above it in the next 30 days. You can also register voluntarily below the threshold. The page's public update date is 10 October 2024, so recheck the figure before you rely on it.

      Shopify's UK tax setup page gives the same £90,000 figure over 12 months, and Shopify's UK tax page adds two points. The page says you cannot use Shopify to file or pay your taxes for you. And Basic Tax is available in the UK only for stores set up to collect tax there before 13 May 2026. Newer stores use Shopify Tax or manual tax settings. Our guide to what a Shopify store costs in pounds shows how VAT-inclusive prices affect your margin.

      If your business is based outside the UK

      GOV.UK's registration page says a business based outside the UK must register whatever its turnover if it supplies goods or services to the UK. So the £90,000 figure does not protect an overseas seller by itself. GOV.UK's guidance on overseas goods sold directly to UK customers then sorts sales by where the goods are and what the parcel is worth:

      • Goods already in the UK when sold: you must register and account for VAT on direct sales, whatever the value.
      • Goods outside the UK, consignment worth £135 or less: you charge UK VAT at the point of sale to customers in Great Britain, register for VAT, and issue a VAT invoice. Keep records for 6 years.
      • Consignment worth more than £135: normal import VAT and customs rules apply at the border.
      • Goods outside the UK, sold only to UK VAT-registered businesses: if these are your only such UK sales, you do not need to register. You get the customer's VAT number, check it, and put a reverse charge note on the invoice.
      • Zero-rated goods only: you can apply for an exemption from registration.

      Three details need care. The £135 limit applies to the whole consignment, not each item. The value is the price paid, leaving out transport and insurance unless they are in the price and not shown separately. And if an order changes so the value goes above £135, you may have to adjust the VAT you already charged.

      The registration address matters too. GOV.UK says it must be your principal place of business. The page says it should not be a mail-forwarding or registered-office address, and it says a virtual office or a UK address alone is unlikely to show a UK establishment. If you sell through an online marketplace, a separate GOV.UK page (history dated 13 May 2022) says the marketplace collects and accounts for the VAT on consignments of £135 or less into Great Britain, except where the buyer gives a UK VAT number. Northern Ireland has its own rules in the same guidance, so ask an adviser if you ship there.

      Customs duty on small parcels is planned to change

      HMRC published a policy paper on 13 July 2026 and updated it on 28 October 2026. It describes a planned change: removing the £135 duty relief and bringing in new customs arrangements for low-value imports. The relief has not been removed yet. The paper says the measure will come into force on a day the Treasury appoints in regulations made by October 2028 at the latest, and that the timetable was brought forward from March 2029. It also describes a fiscal representative: a UK-based business that takes on joint liability for debts of an overseas seller on these customs declarations. It says the detailed requirements will come in secondary legislation and public notices, and the page shows no regulations already made. It does not cover VAT. Because this is a policy paper, the date and details can change.

      No rates, forms or fees are confirmed in what we read. So treat this as a planning question for the reader to ask about, not a rule to apply today. Ask your courier or fulfilment partner who will declare and pay duty from the start date, and whether you will need a fiscal representative. Shopify's UK tax reference says duty paid puts import costs on you and may create VAT obligations, while delivered at place puts them on the customer. It also says that if you switch on duties and import taxes for UK orders, only that system collects tax on them.

      Show prices, VAT and your details clearly

      Three things belong on the storefront of any eCommerce store.

      • Prices with tax included. GOV.UK's distance selling page, last publicly updated in September 2015, lists the total price including all taxes among the details to give before an order. Shopify's help page says the UK is a country where sales tax generally must be included in displayed prices of most goods, and gives the setting under Settings, then Taxes and duties. Check the current rules too.
      • Delivery cost in the total. A CMA open letter to online retailers dated 2 November 2026 says mandatory delivery fees belong in the total price at every stage where a price appears. Our guide to UK consumer law for online stores covers that letter and the pricing rules in full.
      • Your details. GOV.UK's online selling page says to give your email address before an order and your VAT number if you are registered. Its list of pre-order details also includes your business name, address and contact details. Both pages show a public update date of 2015.

      Delivery: what you promise and what the law adds

      Before the order, GOV.UK's distance selling page (public update date 2015) says to tell the customer your delivery arrangements, costs and how long goods will take. After it, the default is set by the Consumer Rights Act 2015, section 28. If you and the customer agreed no time, you must deliver without undue delay and no later than 30 days after the contract is made. The legislation.gov.uk page notes pending changes to other parts of the Act, so check the current text.

      The same section gives the customer remedies when you do not. If you refuse to deliver, or on-time delivery was essential given the circumstances, or the customer told you so before the sale, the customer may treat the contract as ended. In other cases the customer may set a reasonable new deadline and end the contract if it passes. When a contract ends, you must refund without undue delay. A December 2013 government guidance document, written for the Consumer Contracts Regulations, adds that risk passes to the customer on delivery, except where the customer arranged a courier you did not offer.

      For a Shopify store, that turns into practical choices:

      • Set a delivery estimate for each zone that you can meet in normal weeks, including any customs time for parcels that cross a border.
      • Say when the order cut-off is and which days you do not ship.
      • Decide what you do with a lost or damaged parcel before the first one happens.

      Returns in one short section

      For goods bought online, GOV.UK's distance selling page (public update date 14 September 2015) says customers can cancel up to 14 days after delivery without giving a reason. The December 2013 guidance adds the detail: the period starts the day after the goods arrive, and you refund within 14 days of getting the goods back or proof of postage, whichever is earlier. The refund covers the outbound delivery, up to the cost of your cheapest standard option. Customers pay to send goods back unless you agree to bear the cost, and the guidance says you must make clear before the sale that they will pay. Faulty goods fall under separate rights. If you do not tell customers about the right to cancel, GOV.UK says they can cancel for up to 12 months. These rules come from a 2015 page and 2013 guidance, so check the current regulations before you write your returns terms. Our returns and refunds rules guide for the UK, EU, US and Canada covers this in full.

      A pre-launch checklist for a UK customer store

      1. Write down where your business is based and whether you are, or must be, VAT registered.
      2. If you sell from overseas, list which parcels are worth £135 or less and which are worth more.
      3. Turn on tax-inclusive prices and place a test order as a UK customer.
      4. Check that the delivery cost shows before the final checkout step.
      5. Put your email address and, if registered, your VAT number on the site.
      6. Check the order button makes clear the customer is paying, as the December 2013 guidance asks.
      7. Set realistic delivery times per zone and match them across the store.
      8. Write returns terms that state who pays for the return and link them from the checkout.
      9. Decide who issues VAT invoices and who keeps records for 6 years.
      10. Ask your courier how it will handle duty on small parcels if the planned change goes ahead.

      Questions for your accountant or adviser

      • Must my business register for VAT, and from which date?
      • Do the consignment rules apply to the way I ship, and who carries the VAT on marketplace sales?
      • What will the low-value parcel duty change mean for my prices, and will I need a fiscal representative?
      • How should I treat VAT on Shopify's own charges, Northern Ireland orders and my agency's invoices?

      This is general information, not legal or tax advice. Check the current rules or ask a qualified adviser before you decide.

      ESTASOFT can help you build and configure a store for UK customers through its eCommerce and Shopify solutions services. To start, send a short brief on the contact page. If you want the pricing and reviews rules next, read UK consumer law for online stores.

      Sources

      Written by
      ESTASOFT

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