Please note: We are Magento developers, not tax advisors. This guide only explains how to configure your shop technically. Please clarify any tax and legal questions with your tax advisor or the relevant authority.
Since 1 January 2021, the United Kingdom (England, Scotland and Wales) has been a non-EU country for VAT purposes. If you run a Magento shop outside the UK and continue selling to Great Britain, you should adjust your tax and shipping settings accordingly. Northern Ireland is a special case (see below).
What has changed for sales to Great Britain
Great Britain is now treated like any other third country for VAT. In addition, sales to UK consumers follow the UK's own VAT rules, which are independent of EU law. You essentially have three practical options for setting up your shop.
Option 1: Sell to consumers under the new UK rules
For consignments with a value up to GBP 135, sellers charge UK VAT (currently 20%) at the point of sale and remit it to the UK tax authority (HMRC). This usually requires registration with HMRC.
- Consignments up to GBP 135: UK VAT is charged at the point of sale and remitted to HMRC.
- Consignments above GBP 135: import VAT and customs are handled at importation, not at the point of sale.
Our extension GEISSWEB EU VAT Enhanced supports the GBP 135 threshold from version 1.12.0 (Magento 2) and 1.9.0 (Magento 1) and automatically calculates UK VAT for qualifying consignments.
Option 2: Set a minimum order value for the UK
If you want to avoid charging UK VAT on small consignments, you can set a minimum order value above GBP 135 for deliveries to the United Kingdom. That way orders always fall into the range where import VAT and customs are handled at importation, and you do not have to charge UK VAT at the point of sale.
Option 3: Treat the UK as a regular non-EU country
If you sell mainly to businesses or do not want to charge UK VAT at all, treat Great Britain like any other third country:
- Remove the UK from your EU country list. Our extensions will then calculate 0% VAT for UK addresses.
- If applicable, set any existing UK tax rate to 0% so that no VAT is shown.
Tax rates can be updated conveniently on a schedule – see Scheduled Tax Rate Mass Updates.
Special case: Northern Ireland
Northern Ireland holds a special status: for the movement of goods it largely remains EU territory for VAT purposes. Treat Northern Ireland like an EU country:
- VAT identification numbers from Northern Ireland carry the prefix
XIinstead ofGB. - You can recognise Northern Irish addresses by postcodes starting with
BT.
Create a tax rate for Northern Ireland that matches the postcode filter BT*. This keeps EU-compliant VAT in place for Northern Irish addresses, while the rest of the UK is treated as a third country.
Need a hand?
If you have questions about configuring your shop, feel free to contact us. For tax questions, please consult your tax advisor.