For the past year, UK and European leaders have been working to agree on the rules that will regulate relationships between these two entities going forward.
After Brexit, the transition period will officially be over, and the UK will be fully separate from the European Union.
And as a European e–commerce company with UK customers (or a UK company with EU customers), you undoubtedly have plenty of questions and concerns about how this impacts your business, particularly around selling to customers and shipping their orders.
In this post, we cover the latest Brexit updates and how they impact sales and shipments to the UK.
What is the latest news with Brexit?
The nearly 11-month long Brexit transition period that began on the 31st of January 2020 comes to a close on the 31st of December 2020.
As of the 1st of January 2021, the UK is officially no longer part of the EU in any capacity.
Unfortunately, 61% of UK businesses haven’t made operational preparations for formally leaving the EU. And with 2.31 million EU nationals working in the UK, there are sure to be recruitment challenges as well. To make matters worse, there’s a concern that Brexit will damage domestic and foreign investment in European economies.
Although the transition period is coming to a close, so much uncertainty remains.
How will this impact e–commerce companies?
E–commerce companies in the UK with EU customers will be affected differently than EU companies with UK customers.
Regardless, there are sure to be changes in how you serve your customers.
Here are some predictions that could affect you:
- It’s expected that there will be shipping delays to and from the UK and the EU.
- Additional duties and taxes could encourage more shoppers to purchase with local e–commerce brands rather than international ones.
- There might also be a drop in the pound sterling exchange rate.
Frequently asked questions about shipping to and from the UK after Brexit
To help you better understand how Brexit could affect your e–commerce sales and shipping operations, we’ve put together an authoritative list of FAQs for companies shipping products to and from the UK.
What are the new rules to follow when shipping to the UK?
When shipping to the UK from the EU, you need to collect VAT on orders below ￡135. For orders above ￡135, the orders will be subject to duties and import VAT.
Now let’s have a look at some Custom documents that are required when shipping to the UK.
EU EORI numbers: what will change?
Are you wondering if you need an EU Economic Registration and Identification number? The short answer is yes. As of January 1st 2021, assuming you sell to both the UK and the EU, you will need both a UK EORI and an EU EORI. This holds true no matter where your business is physically located.
Because the UK and EU will be officially separate, you’ll need an EORI for both entities, as you your EORI identifies you as an exporter.
CN22, CN23: which Custom declaration is needed?
Businesses and individuals sending goods from the UK to the EU will need to fill out a customs declaration form, either CN22 or CN23.
To know which one to fill out, use these guidelines:
- CN22 – Packages weighing up to 2 kilograms with a value no more than €425
- CN23 – Packages weighing from 2-20 kilograms with a value greater than €425
DAP and DDP: which strategy do you suggest?
Whether you should use Delivered at Place (DAP) or Delivered Duty Paid (DDP) depends on your business type.
With DAP, the importer is responsible for paying duties. With DDP, the exporter pays them before delivering the product.
Most B2C e–commerce companies should use DDP in order to satisfy customer expectations. DAP might be the right strategy for B2B e–commerce companies or companies deliveries large quantities of goods to a reseller.
VAT: what will it change?
A local tax professional will have the most accurate advice for your particular business. However, there are some general changes that we can report.
- UK sellers must register for VAT in every country they sell to. There is not longer a minimum, so even if you have one order from a country, you need to VAT register in that country. UK sellers should also look into the laws of individual EU countries to determine whether those countries will require a local VAT representative. For these reasons, you may want to disallow VAT from certain countries that you don’t foresee large sales in, in order to simplify your VAT registrations.
- EU sellers that shippers that expect to ship orders below ￡135 to the UK need to register for VAT with HMRC. If you are shipping to the UK, you’ll need to collect VAT on orders below ￡135 (the liability of this shifts to the platform if using an online marketplace such as Amazon or Ebay).
Do merchants need to collect VAT and remit it to HMRC?
Yes, you will need to remit VAT to HMRC each and every quarter. This needs to be done for orders below ￡135 from that quarter.
You will not need to remit VAT for orders above ￡135 orders. Instead, these orders will be subject to import VAT and any duties.
Is every order subjected to duties and import VAT or is there any minimum value?
Every order is not subject to duties and import VAT. Only orders above ￡135 are subjected.
How should we manage returns?
Returns to and from the UK and EU could experience changes. Firstly, there might be a delay with shipping, causing frustration for customers awaiting their refund.
You may want to review your e–commerce shipping strategy. However, you shouldn’t remove the ability to return for your key markets, as a great return experience can increase conversions and retention.
Why ShippyPro is the perfect solution for your international shipments from and to the UK
ShippyPro is supporting all merchants that ship to and from the UK. Our shipping software is Brexit compliant, and we are trying to help businesses find the right answers to their questions.
ShippyPro is the shipping platform that easily helps you ship, track and return your e–commerce orders for national and international shipments. Test now our features with 500 free orders!
If you are looking for specific information about shipping to and from the UK, book a free call with our shipping Experts. Our Team will help you clarify your doubts and find the perfect solution for your business.