As of December 2020, the UK tax set up method changed.
Setting Up and Charging Taxes
- You can use Shopify to automate tax charges.
- Shopify calculates and collects VAT for your UK orders.
- Before you begin setting up UK taxes in Shopify, you need to determine whether you should charge taxes.
- If you need to charge VAT, go to Settings > Taxes in your Shopify account.
VAT Registration and Shopify Fees
- Typically, you need to register for VAT if you are located in the UK and your sales to UK customers within a 12 month period are equal to or greater than 85,000 GBP.
- VAT on Shopify Fees for the UK: If your UK business is registered, there is no VAT on Shopify fees, with 20% reverse charge.
Tax Requirements for Online Stores
- UK taxes must apply to online stores.
- Corporate tax applies to registered UK businesses.
- As an online business, you must pay income tax and national insurance contributions.
- If registered for VAT, charge it on most goods and services.
- Importing goods over £135 in value has a 2.5% customs duty.
PRO TIP: Shopify can calculate and collect VAT, but as always, exceptions exist.
Invoicing and Record-Keeping
Importance of issuing valid invoices for bookkeeping and tax purposes:
- Sufio can help create VAT detailed, EU regulation compliant invoices.
- Sufio can also issue professionally translated invoices in over 30 languages.