Collect tax in the United Kingdom

In the United Kingdom (UK), Stripe Tax supports calculation and collection of VAT.

When to register for tax collection

See Thresholds to get insights about your potential tax registration obligations in the United Kingdom. Stripe also notifies you with email and Dashboard alerts when you need to register to collect tax. Learn more about how the monitoring tool works.

If you’re based outside the United Kingdom, you must register in the UK within 30 days of performing the first taxable transaction there. You’re also liable to register if you have reasonable grounds to believe that you’ll perform taxable transactions within the next 30 days. A taxable transaction is any sale made in the UK that’s neither exempt from VAT nor subject to reverse-charge. Taxable transactions include those that are zero-rated for VAT purposes.

For example, if you’re based in the United States (US) and sell digital services to overseas customers, you must register in the UK as soon as you have reasonable grounds to believe that a UK customer will purchase your services. If a UK consumer has already bought your digital services, you must register within 30 days of performing the sale. However, if you only sell to UK businesses, you don’t need to register because such sales are subject to reverse charge and don’t constitute taxable transactions for UK VAT purposes.

The HMRC VAT Notice 700/1 Who should register for VAT provides more information on registration in the UK.

• Threshold: 1 transaction in the UK.
• Included transactions: Any taxable transactions that reverse charge doesn’t apply to.

If a remote business sells digital services or low-value goods into the UK exclusively through online marketplaces that are responsible for collecting tax on these sales, the seller isn’t required to register for UK VAT. These sales don’t count towards the seller’s registration threshold.

Register to collect tax

Find more information on how to register for VAT in the United Kingdom on the government website:

• General information about UK VAT
• How to register

After you’ve registered to collect tax in the United Kingdom, go to Registrations to add your registrations to Stripe in the Dashboard. This turns on tax calculation and collection in Stripe for your transactions in the United Kingdom.

Note that the One-Stop Shop (OSS) registrations don’t allow tax calculations in the UK, as the UK is no longer part of the EU. UK businesses can register for OSS schemes to collect taxes within the EU.

Learn more about how to add your registration in the Dashboard.

How we calculate taxes

When both your business and your customer are in the UK, Stripe calculates UK VAT unless the sale is exempt or zero-rated.

If you’re a remote seller providing digital services to UK customers, UK VAT is typically collected on sales to individuals. Tax isn’t charged on sales to business customers who provide their VAT identification number.

When goods are shipped into the UK from abroad, Stripe treats the sale as an export and doesn’t calculate tax, unless you choose to calculate tax on cross-border sales of goods into the UK through the tax registration settings. Generally, businesses need to collect tax on these sales if they act as the importer for customs purposes. If goods are imported in the customer’s name, the sale is considered to occur outside the UK, and no UK VAT is due. Cross-border sales of goods into the UK might also be subject to import taxes and customs duties in the UK, which Stripe doesn’t calculate.

Stripe doesn’t calculate VAT on imported low-value goods shipped into the UK in packages valued at up to 135 GBP, unless you select the option to calculate tax on cross-border sales of goods into the UK.

The United Kingdom has some territories outside the scope of the standard tax system that have different rules. Stripe won’t calculate tax for customers based there, even if you’ve added a registration for the UK. This applies to the following locations:

• British Virgin Islands
• Channel Islands (Guernsey and Jersey)
• Falkland Islands
• Gibraltar
• Isle of Man

Learn more about how Stripe handles excluded territories.

Northern Ireland applies its own special VAT rules. If you sell goods into Northern Ireland, you have to follow the same rules as other European Union countries. But if you sell services, you have to charge taxes based on the laws of the United Kingdom. Stripe Tax doesn’t support sales of goods to or from Northern Ireland.

Report and file your taxes

Stripe Tax has filing partners – Taxually, Marosa, and Hands-off Sales Tax (HOST) – to help automate your tax filing. These partners automatically sync your tax transaction data in real time, eliminating the need for manual data entry or file transfers. Learn more about tax filing.

Stripe also provides reports of your completed tax transactions. Go to Registrations to access these reports. Learn more about the different types of reports.

Marketplace tax liability

The UK uses the terms “online marketplace operators” and “digital platform operators” to refer to marketplace operators that might have tax collection obligations. To qualify as an online marketplace operator, the business must set terms or conditions for the sale, process or enable customer payments, or handle ordering or delivery of the product. A business isn’t considered an online marketplace if it only processes payments, lists or advertises goods, or redirects customers to other websites or apps without further involvement in the sale.

The tax collection obligation for marketplace operators typically includes:

• Sales of digital services
• Sales of goods by remote sellers to UK private individuals when the goods are in the UK at the point of sale.
• Sales of goods to UK private individuals if the goods are imported into the UK in packages valued at 135 GBP or less.

Marketplace operators facilitating other types of sales might need to collect VAT based on different indicators and contractual arrangements.

A marketplace operator that collects UK VAT on a sale is treated as if it were buying the product from the merchant and selling it to the customer. This applies only for VAT purposes and doesn’t change the commercial position where the title to the product passes from the seller to the buyer.