Sep 29

2026

The VAT rules that catch small online retailers selling into the UK and Ireland

Selling online into the UK and Ireland means dealing with two separate VAT systems, not one. The UK VAT registration threshold is £90,000 for UK-established sellers, but there is no ordinary threshold for a non-established taxable person making taxable UK supplies. Ireland has its own domestic thresholds, but EU distance-selling and import rules sit alongside them. Northern Ireland sits between the UK and EU systems for goods. Most sellers who get caught out are not ignoring VAT. They are applying the wrong threshold to the wrong sale.

Two systems, not one, since Brexit

Before Brexit, a UK seller could often treat sales into Ireland much like sales into England. That stopped in January 2021. Great Britain and the EU, which Ireland remains part of, now run separate VAT regimes with their own registration routes, marketplace rules and low-value goods rules.

Northern Ireland is the exception that proves the point. Under the Windsor Framework, it follows UK VAT rules for many domestic purposes and services, but remains aligned with EU VAT rules for goods moving between Northern Ireland and the EU. Treating “UK and Ireland” as one VAT market is the single most common starting mistake.

Selling into the UK

If you are a UK-established business, you must register for VAT once your taxable turnover passes £90,000 in any rolling 12-month period, a threshold unchanged since April 2024. If you sell through more than one channel, your own website, Amazon, Etsy or any other marketplace, all taxable turnover counts toward that single figure. Sellers regularly miss this because they track each channel separately and never add them together.

If you are not established in the UK, the position is different. There is no normal registration threshold for a non-established taxable person making taxable supplies in the UK, so the obligation can arise from the first taxable UK sale. However, marketplace rules can change who accounts for VAT. For goods sold to UK consumers in consignments of £135 or less through an online marketplace, the marketplace is usually treated as the deemed supplier and accounts for the VAT at the point of sale.

That does not mean overseas sellers can ignore UK VAT completely. Direct sales through your own website, holding stock in UK fulfilment centres, selling goods already located in the UK, or making supplies not covered by the marketplace deemed-supplier rules can still create registration or reporting issues. If all your UK sales are covered by the online marketplace rules, HMRC may allow an exemption from registration, but that needs checking against the facts rather than assumed.

Selling into Ireland and the wider EU

Ireland runs a domestic VAT threshold of €85,000 for goods and €42,500 for services for businesses established in Ireland. Those figures are not the main test for a Great Britain seller shipping goods from outside the EU directly to Irish consumers.

A GB seller sending goods to Ireland is normally dealing with EU import VAT and customs rules. For consignments not exceeding €150, the Import One Stop Shop can be used to collect Irish VAT at checkout and simplify import VAT accounting. If the sale is made through an online marketplace, the marketplace may be treated as the deemed supplier for VAT. If IOSS is not used, the customer may face import VAT and handling charges when the goods arrive.

The separate €10,000 EU-wide threshold is often misunderstood. It applies to certain intra-EU B2C supplies, including intra-Community distance sales of goods and cross-border TBE services. It is most relevant where goods are being dispatched from within the EU or Northern Ireland, not where a GB seller is importing goods directly from Great Britain into Ireland.

Northern Ireland: neither one nor the other

Northern Ireland causes more confusion than it should because it does not fit neatly into either system. Goods moving between Great Britain and Northern Ireland are generally dealt with under UK VAT rules, while goods moving between Northern Ireland and the EU, including the Republic of Ireland, follow EU-style VAT rules for goods.

A business trading goods between Northern Ireland and the EU may need to use an XI-prefixed VAT number rather than relying only on a standard GB VAT number. Northern Ireland sellers can also use the EU’s OSS scheme for qualifying distance sales of goods into the EU, something ordinary Great Britain sellers cannot do for goods dispatched from Great Britain.

Marketplace reporting has not always kept pace with this complexity. If a platform labels Northern Ireland deliveries simply as “GB”, that can distort your VAT reconciliation if you rely only on marketplace reports rather than checking the underlying delivery addresses yourself.

Two changes from this year that are catching sellers out

Two significant changes landed in 2026, and a lot of guidance still in circulation predates both.

From 1 April 2026, HMRC’s Import One Stop Shop intermediary process became available. Businesses not established in the EU or Northern Ireland, including many Great Britain sellers, may need an approved intermediary if they want to use IOSS for low-value goods sold to consumers in the EU or Northern Ireland. If you have been relying on an old IOSS arrangement, review it rather than assuming last year’s setup still works.

From 1 July 2026, the EU removed the long-standing €150 customs duty relief for low-value parcels and introduced a temporary €3 customs duty on low-value consignments imported from outside the EU. The charge applies per item category, identified by tariff classification, and is due to run until 1 July 2028 while the EU develops its wider customs reform programme. It sits alongside VAT, not instead of it. For a seller regularly shipping low-value parcels into Ireland, that charge can change margin calculations quickly.

Where sellers actually get caught out

A handful of mistakes account for most of the problems we see. The first is assuming the UK’s £90,000 threshold gives overseas sellers the same cushion, when it often does not. The second is treating marketplace sales as fully covered and then forgetting that direct website sales are not handled in the same way. The third is adding up sales per channel instead of combining taxable turnover, which can mean a UK-established seller misses the registration threshold.

Ireland creates its own traps. Some sellers use Ireland’s domestic €85,000 goods threshold when the real issue is import VAT, IOSS or EU distance-selling rules. Others price EU-bound parcels as if the July 2026 customs duty change does not apply, only to find that a low-margin product has become unprofitable once VAT, duty, platform fees and handling costs are all included.

Northern Ireland is the final regular problem. For goods, it is not always “just the UK” and not simply “the EU” either. Sellers need to identify whether goods are moving GB to NI, NI to EU, EU to NI, or GB to Ireland, because each route can produce a different VAT answer.

Getting the structure right from the start

None of this is unusual or unusually complicated once it is mapped out properly, but it rewards being set up correctly from the beginning rather than corrected after HMRC or Revenue query a backdated position. A large, unexpected VAT assessment landing years after the event is exactly the kind of shock that turns a healthy small business into one showing genuine signs of financial distress, and if it does reach that point, our recovery and restructuring team would rather see you before a CVA or insolvency process becomes the only option left.

Keeping clean, reconciled management accounts across every sales channel makes this far easier to monitor, and it is worth reviewing alongside your other HMRC and VAT compliance obligations rather than in isolation, particularly as Making Tax Digital continues to extend its own reporting requirements. If growth means your accounts increasingly need external audit sign-off for lenders or investors, a messy multi-jurisdiction VAT position is one of the first things that surfaces during that process, and it is far cheaper to fix in advance than to explain afterwards.

If you sell across the UK and Ireland specifically

This is precisely the position a lot of growing online retailers find themselves in without planning for it: UK sales building towards £90,000, direct EU imports needing the right VAT and customs treatment, marketplace sales sitting under a different deemed-supplier model, and Northern Ireland orders sitting awkwardly between both systems. Our cross-border accounting and tax team works with online sellers trading across this exact border regularly, and can map out which registrations you actually need, in which order, before HMRC or Revenue does it for you retrospectively. Get in touch with SCC Chartered Accountants to get your VAT position properly reviewed against where your sales actually are, not where you assumed they were.