UK VAT for Shopify stores: the complete guide

Do you need to register for VAT?

You must register for VAT when your VAT-taxable turnover goes over £90,000 in any rolling 12-month period, or if you expect it to go over £90,000 in the next 30 days alone. The rolling period means you check the last 12 months at the end of every month, not just your tax year.

You can also register voluntarily below the threshold. That can make sense if you mainly sell to VAT-registered businesses, or buy lots of stock with VAT, but it makes your prices higher for consumers. Read more about the threshold.

UK VAT rates for products

Most products are standard-rated at 20%. Some are reduced-rated at 5%, and some are zero-rated at 0%, such as most food, books and children's clothes. Rules can be detailed, so check HMRC's guidance for your product category. Use the VAT calculator to work out prices.

How to set up VAT in Shopify

1. Go to Settings, then Taxes and duties.
2. Choose the United Kingdom and enter your VAT registration number.
3. Turn on the option to include tax in your prices, so customers see VAT-inclusive prices.
4. Set product-level overrides for any 5% or 0% products.
5. Check that shipping is taxed correctly for your products.
6. Place a test order and check the VAT shown on the invoice.

Always check the current Shopify admin, as menu names can change.

Showing prices with VAT

UK consumers expect prices that include VAT, and prices shown to consumers should be the full price they'll pay. If you sell to businesses too, you can show prices excluding VAT to trade customers through B2B price lists or a wholesale app. Read more.

Selling to the EU after Brexit

When you send goods from Great Britain to EU consumers, the parcel is an import into the EU. For parcels worth up to €150, you can register for the EU's Import One-Stop Shop (IOSS), charge EU VAT at checkout and send customers their orders without surprise fees. Without IOSS, customers may pay import VAT and a handling fee on delivery, which often leads to refused parcels.

For parcels over €150, customs duties may also apply. Shopify can show duties and import taxes at checkout on some plans. See how to set up UK and EU taxes in Shopify.

Northern Ireland

Goods sold from Northern Ireland, or moved between Great Britain and Northern Ireland, can follow different rules under the Windsor Framework. Read about shipping to Northern Ireland.

VAT schemes that can help

HMRC offers schemes that can simplify VAT for small businesses, such as the Flat Rate Scheme and cash accounting. Whether they save you money depends on your costs and sales. Ask your accountant which suits you.

Record keeping and Making Tax Digital

VAT-registered businesses must keep digital records and file VAT returns using compatible software under Making Tax Digital. Connecting Shopify to accounting software such as Xero or QuickBooks makes this much easier. See how to connect Shopify to Xero.

Frequently asked questions