E-commerce in the United Kingdom

As many as 36% of all UK online shoppers buy from a foreign webshop. As a result, the UK e-commerce market offers opportunities. And at the same time, the rules after Brexit create extra administration. Decide for yourself whether this market is interesting enough. Investigate whether you are still making a profit despite the costs and extra administrative burden. 

Lower the threshold

Compared to other European consumers, the British consumer is cautious about buying foreign products online. Read up on the local legislation before you start selling online. With these 6 tips, you can lower the threshold for your British customer:

• Set up your website in correct business English.
• Be transparent. British customers like to know who is behind an online shop.
• Provide detailed product information.
• Apply for a UK domain name.
• Use UK sizing systems for clothing and shoes.

Apply for a local domain name

When doing business online in the UK, register an online shop with a co.uk domain extension at the British non-profit organisation Nominet. Your registration is done through 'registrars' – online companies that sell domain names and other services. To apply you sign a contract with both Nominet and a provider. Nominet will then register you as an official domain name holder.

Quality mark for your online shop

The trade association representing e-commerce businesses in the UK is called Interactive Media in Retail Group (IMRG). In addition to a membership with IMRG, the following online shop quality marks are worth considering when doing business internationally with UK consumers:

• Trusted Shops: a European quality mark for online shops that checks whether a web-based shop respects the rights of customers. It ensures that consumers get their money back in case of disputes or non-delivery and offers customer reviews.
• SafeBuy: a British quality mark for online stores which, among other things, checks whether an online shop complies with British and European legislation..

Payment options

Use a payment system that UK consumers are familiar with. UK consumers prefer to pay in British pounds (GBP) using PayPal, by credit card or debit card.

The UK is no longer part of the EU

The UK is no longer part of the EU and is now a 'third country', meaning a country outside the EU. This has administrative consequences for your export. Think of product requirements, import and export declarations, VAT rules, and export documents.

Product requirements

As a third country, the UK sets local product requirements and the CE marking is no longer recognised. This is replaced by the UKCA mark. This stands for UK Conformity Assessed, a new product marking for goods marketed in Great Britain (England, Wales, and Scotland). 

Earlier, the UK indicated that UKCA was mandatory from 1 January 2025. The UK government decided that the UK will still accept CE marking. Even after 2025. You do need a UKCA mark for some products. Check for yourself on the UK government's website whether your product needs this marking.  

The Netherlands Enterprise Agency has more information about product requirements (in Dutch).

Note: Northern Ireland is formally outside the EU single market, but EU free movement of goods rules and EU Customs Union rules still apply. For this country you need a CE mark or UKNI mark.

Customs

For all goods that you sell and ship to consumers in the UK, you file an export declaration at customs in the Netherlands and an import declaration at UK customs. You need an EORI number for the export declaration. If you do not yet have a Dutch EORI number, apply for one from Dutch Customs.

For your import declaration in the UK, you need a UK EORI number. This number starts with GB and can be obtained from the British government. This import declaration cannot be done with your Dutch EORI number. 

You also pay more costs such as import VAT and handling costs. Check whether you need export documents. A carrier or freight forwarder (in Dutch) can support you in this process.

VAT

Since the UK is now a third country, deliveries fall under export to countries outside the EU.

For export, you apply the 0% rate for VAT in the Netherlands. You do not owe Dutch VAT. You do, however, state the turnover in your periodic VAT return. You do this under heading 3a, deliveries to countries outside the EU (export).

Northern Ireland is still subject to the same VAT rules as other EU nations. The long-distance sales scheme continues to apply for deliveries from your shop to consumers in Northern Ireland. You can declare the VAT via the OSS scheme.

Deliveries up to £135

The UK has a threshold amount for VAT. For packages up to a value of £135, you pay UK import VAT. For this, you need VAT registration in the UK. All consumer orders entering the UK are covered by these rules. UK Customs checks this. If you are not VAT compliant, UK Customs may refuse your goods.

Deliveries from £135

For deliveries from £135, your customer must pay import VAT. Your business does not need VAT registration in the UK. Your UK customer may be required to pay import duties and customs clearance fees. If your products are of preferential EU origin, your customer will not pay import duties. However, you will need to apply for export documents for this. 

When determining the threshold amount, UK Customs looks at the so-called net value (in GBP) of the goods in the consignment. If the packing or shipping costs are listed separately on the invoice, these costs are not included in the £135 amount.

Registration

If you have to pay UK VAT on your sales, register your business in the UK for VAT with the British Tax Authorities HMRC (Her Majesty's Revenue & Customs). You can complete the online registration in 2 steps. In the first step you open a ‘Government Gateway Account’. When you have this number, the VAT registration starts automatically. After your registration, you will file a VAT return in the UK every three months (quarterly).

You may also charge and pay UK VAT on all turnover. In any case, this is more customer-friendly because your buyer won't pay import VAT. And it is easier for your webshop's payment system. Your customers pay the UK VAT when they pay for the order in your webshop. You then pay the VAT via your UK VAT return.

Consider whether a VAT registration or appointing a tax representative in the UK is sensible. Discuss with your accountant or financial advisor what the best solution is for your situation.

More information about the VAT changes can be found on the website of the UK government.

Reverse-charge import VAT

Just like in the Netherlands, you can also reverse-charge the import VAT to your declaration in the UK. When importing into the UK, you pay the English VAT at customs upon import. This payment coincides with the import declaration. If you do a lot of business with the UK and are liable for VAT, you may be able to reverse-charge this import VAT to your declaration. You can request permission for this reverse charge at HM Revenue & Customs. This system resembles the reverse-charge mechanism, referred to as ‘the Article 23 permit’ in the Netherlands.

British EORI number

To declare your deliveries up to £135, you need a British EORI number in addition to a British VAT number. This begins with GB and you can request this customs number from the British government. A customs representative in the UK can help you with this. The EORI number that you use for the export declaration in the Netherlands does not apply to customs clearance in the UK. For this you need the new number from the British government.

B2B deliveries

Online shops often sell directly to consumers. When you sell B2B, your business customers have their own VAT number. For export, you apply the 0% rate for VAT in the Netherlands. You do not owe Dutch VAT. Registration for VAT in the UK is not necessary. Your business customer handles this themselves upon import. Please note the Incoterm® that you have agreed upon for the delivery. For example, if you have agreed to deliver under Incoterm® DDP, you will need a tax and customs registration in the UK. In this case, the seller is responsible for customs clearance and pays any UK import charges, such as import duties or import VAT.

Returns

Shipping software provider Sendcloud surveyed the British e-commerce market. British online shoppers regularly send goods back. To a large extent, a good returns policy determines if your customer will order again. And most British online shoppers think that the seller is responsible for returns. If you take care of your customer, they are more likely to keep buying from you.

This is how you arrange returns

Discuss in advance with your logistics service provider how to organise the returns process. This can be done, for example, using the British government's returned goods relief form (pdf). Together with your logistics partner, create an online form for your own online shop based on the returned goods relief. Have your customer complete this form and a 'commercial invoice' online or do this together with your customer. For example by telephone or via chat. Your customer will include the completed forms in the return shipment. The completed forms are added to the return shipment. Your logistics provider uses the same tracking code for the return journey.

The forms enclosed make it clear that the products are being returned. Your logistics partner settles the paid import duties and VAT in the UK. You pay nothing in the UK. Based on the form and the tracking code, Dutch Customs can see that these are exported goods being returned. You do not owe import duties and VAT. You do have to pay any handling costs involved.

Alternative

A return costs money because you or your carrier incurs transport and handling costs. Determine if these costs outweigh the value of the goods. And if you can re-sell the products. If not, you can choose to let the customer keep the goods, have the clothes destroyed or donate them to charity.

Numbers

Retail association Interactive Media in Retail Group (IMRG) publishes reports with figures and developments on the e-commerce market in the UK. These reports are only accessible to members. Figures can also be found on the website of the UK Office for National Statistics. This organisation is similar to the Dutch Central Bureau of Statistics (CBS).