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Import VAT when you're not VAT registered
If you're under the £90,000 VAT threshold, import VAT and the VAT on Amazon's fees are real costs you can't reclaim. Here's how to cost them in.
If you're not VAT registered, you still pay 20% import VAT on stock you bring into the UK, and you can't reclaim it. It's a cost, just like freight, so it belongs in your landed cost. The upside is that you don't charge VAT on your sales, which usually more than makes up for it.
This catches out a lot of new sellers, because most guides and calculators assume you're VAT registered.
Do you need to be VAT registered?
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days alone (gov.uk). Turnover means your sales, not your profit.
Plenty of small sellers are well under that, so they aren't registered. Everything below is about them.
How import VAT works
When goods arrive in the UK, HMRC charges import VAT at the same rate as UK sales, usually 20%. It's worked out on the customs value (the goods plus shipping to the UK) plus any import duty (gov.uk).
You normally pay it through whoever brings the goods in: the courier, freight forwarder or customs broker adds it to their invoice before releasing your shipment.
What happens next depends on your registration:
- VAT registered: you reclaim it on your VAT return. With postponed VAT accounting, you declare and reclaim it on the same return, so no money changes hands.
- Not VAT registered: HMRC says you "still have to pay the import VAT but you will not be able to reclaim it" (gov.uk).
Orders of £135 or less
For consignments worth £135 or less, VAT is usually charged by the seller or marketplace at checkout instead of at the border (gov.uk). That's why AliExpress adds VAT to your basket. If you're not registered, that VAT is a cost too.
VAT on Amazon's fees
Since August 2024, Amazon has charged 20% VAT on its seller fees to UK sellers: referral fees, FBA fees, storage and the rest. VAT-registered sellers reclaim it; sellers who aren't registered can't, so their Amazon fees are effectively 20% higher (Armstrong Watson).
The upside: no VAT on your sales
A VAT-registered seller has to pay HMRC one sixth of every VAT-inclusive sale (20% VAT on the price before VAT). On a £12.99 sale, that's £2.16 gone straight away.
If you're not registered, you keep the full £12.99. That's usually worth more than the VAT you pay on your costs, but only if you've costed that VAT in properly.
Worked example: the same product, both ways
Here's one product worked out both ways in DealDetective: 500 silicone dog lick mats from Alibaba at $1.20 each, sold on Amazon UK through FBA at £12.99. The import costs are the ones from our landed cost guide.
| Per unit | VAT registered | Not VAT registered |
|---|---|---|
| Landed cost (including import VAT if not reclaimable) | £1.73 | £2.01 |
| Amazon referral fee, FBA fee, storage and inbound | £4.27 | £4.27 |
| VAT on Amazon's fees (not reclaimable) | none | £0.81 |
| VAT on the sale, paid to HMRC | £2.16 | none |
| Profit per unit | £4.83 | £5.90 |
The seller who isn't registered pays £0.28 more per unit in import VAT and £0.81 more in VAT on Amazon's fees. But they keep the £2.16 of VAT on each sale, so they make £1.07 more per unit.
The catch: those VAT costs are real, and easy to miss. A spreadsheet that leaves them out would show this seller a landed cost of £1.73 instead of £2.01 and fees of £4.27 instead of £5.08, overstating profit by £1.09 a unit. On products with thinner margins, that's the difference between a deal and a loss.
How to cost it in
If you're not VAT registered:
- Add 20% import VAT to your landed cost: 20% × (goods + shipping to the UK + duty).
- Add 20% to every marketplace fee: referral fees, fulfilment fees, storage and advertising.
- Don't take VAT off your selling price: you keep the whole amount.
- Watch the threshold. If your sales are heading towards £90,000 over 12 months, your numbers will change once you register. An accountant can help you plan for that.
In DealDetective, set VAT registered: No in Settings and every analysis does this for you.
Sources
Checked on 13 October 2026.
- HMRC: Register for VAT (threshold)
- HMRC: VAT on goods from abroad (imports)
- HMRC: VAT and overseas goods sold directly to customers in the UK (£135 rule)
- Armstrong Watson: New Amazon VAT charges, what UK sellers need to know
This is general information, not tax advice. An accountant can confirm how VAT applies to your business.
Fees, tax rates and rules change. Figures were checked on 13 October 2026 against the sources listed above. This guide is general information, not tax or financial advice.