VAT on dropshipping from China through your website
For a VAT-registered UK seller, qualifying China-held consignments of £135 or less attract supply VAT at checkout; above £135, normal import VAT rules apply. An unregistered UK-established seller must assess the registration threshold separately. Confirm the shipment facts with Cambridge China Bridge.
Start with the seller and the stock location
This guide covers a business established in the UK selling through its own website to consumers in Great Britain, meaning England, Scotland and Wales. Ask your accountant to confirm that scope before using these steps, particularly if you have only a UK registered address, sell to VAT-registered businesses or deliver to Northern Ireland.
For each product, record where the goods physically are when sold. Ask the supplier to distinguish China-held stock from stock already in a UK warehouse. Keep the commercial decision about dropshipping versus bulk sourcing separate from the VAT settings.
Check registration before switching on VAT
For a UK-established business, compulsory registration depends on taxable turnover, rather than the value of an individual parcel. An unregistered business must monitor whether registration is due and confirm with HMRC whether it should charge VAT on its own sales. Our guide to importing without VAT registration covers the threshold and voluntary registration.
A seller already registered for UK VAT does not need another registration for these arrangements. Give your accountant your registration status, customer destinations and fulfilment routes before configuring checkout.
Check the consignment, not each product
Unless goods are sent individually, HMRC requires the values of the items in a consignment to be added together. A product priced below £135 does not establish that the parcel qualifies. Ask the factory whether it combines products or orders before dispatch.
Give your accountant the customer invoice, discounts, delivery and insurance charges, and the proposed packing arrangement. Ask them to confirm the consignment’s intrinsic value against HMRC guidance. Keep that calculation with the order rather than assuming the factory’s invoice answers the question.
Separate checkout VAT from import VAT
For qualifying China-held consignments of £135 or less sent to consumers in Great Britain, the VAT is domestic supply VAT rather than import VAT. A VAT-registered seller accounts for this at checkout. Have your accountant confirm the product’s treatment before applying a tax setting across the catalogue.
Above £135, normal import VAT and customs rules apply. Agree who will be named as importer and who will handle the charges before dispatch. Our import VAT guide explains recovery and evidence; a checkout entry alone is not a useful basis for planning import VAT recovery.
Make the order record match the parcel
Keep an order record linking the customer invoice, stock location, consignment calculation, checkout tax treatment and dispatch documents. Ask the supplier to flag changes to packing or fulfilment location before shipment so your accountant can review the treatment.
When moving stock into a UK warehouse before selling it, review the website’s VAT settings again. For a UK-established seller, confirm with HMRC how its registration status affects charging VAT on taxable domestic sales. Ask Cambridge China Bridge’s staff in China to confirm stock location and packing arrangements, then give those facts to your accountant.
Frequently asked questions
Do I need VAT registration to dropship from China?
For a UK-established business, assess taxable turnover under the normal registration rules. China-held stock does not by itself answer the registration question.
Does the £135 limit apply to each item?
No. Unless sent individually, the values of all items in the consignment are added together. Confirm how the supplier packs and dispatches the order.
Do I need another VAT number for dropshipping?
No. If you are already registered for UK VAT, you do not need to register again for these arrangements.
What happens when the consignment exceeds £135?
Normal import VAT and customs rules apply. Confirm the importer and payment arrangements before dispatch, then have your accountant check the treatment of your sale.