Brexit and Amazon: UK VAT and Cross-Border Changes of January 2021

In brief: when the Brexit transition period ended on 1 January 2021, new UK law made Amazon collect UK VAT on two types of sale to UK customers: goods sent from outside the UK in parcels worth up to £135, and goods of any value sent from UK stock by sellers not established in the UK. In those cases Amazon charges the VAT at checkout and pays it to HMRC, so it never reaches the seller's payout. The old relief for goods under £15 sent from abroad ended too. At the same time Amazon stopped shipping stock between Britain and the EU, which ended Pan-EU transfers, cross-border EFN orders and returns sent back across that border.

Who collects UK VAT from 2021

Sale to a UK consumer	Who accounts for UK VAT
From outside the UK, parcel up to £135	Amazon
From UK stock, seller not established in the UK	Amazon
From UK stock, UK-established seller	The seller

The cross-border changes

• Stock split: Amazon advised keeping separate stock in UK and EU warehouses.
• Registrations: VAT registration where stock is held; FBA sellers typically needing two EORI numbers (UK and EU).
• Customs: commodity codes, country of origin, duties, and the TCA's rules of origin for zero tariffs.
• Automated long-term storage removals were switched off from 31 December 2020, so removals had to be ordered manually to avoid long-term storage fees.

A worked example

An overseas seller stores stock in a UK warehouse and sells a £24 kettle (VAT-inclusive). From January 2021 Amazon collects the £4 of VAT (24 ÷ 6) and pays it to HMRC; the seller's payout reflects £20 of sales before fees. A UK-established seller making the same sale receives the full £24 and pays the £4 on their own VAT return.

What it means for your bookkeeping

• Marketplace-collected VAT isn't yours. Where Amazon collects the VAT, record the sale net of it — see Marketplace Facilitator VAT.

• Customs costs on stock moves. Moving stock into the UK or EU now involves customs. Customs duty is a cost that can't be reclaimed on a VAT return; take advice on import VAT.

• Separate stock pools. UK and EU inventory are separate, so stock valuation and ageing need tracking in both.

• Watch storage fees. With automated removals off, unmanaged aged stock could attract long-term storage fees.

• Getting the codes right. Marketplace-collected VAT needs its own treatment — see Amazon VAT tax codes in Xero and which VAT return boxes it hits.

How TrueBooks helps

TrueBooks detects Marketplace Facilitator VAT orders and exports by ship-to country, posts them to Xero with the right UK VAT treatment, and keeps UK and EU marketplaces in their own currencies. See the Amazon Xero integration.