Do I Charge Tax on Shopify UK? UK Taxes and Shopify: A Guide for Merchants

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.

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