Shopify now skips UK VAT at checkout on Great Britain orders over £135 that are routed to a fulfillment location outside the UK, according to its Oct. 23 changelog.
For an Ecommerce Paradise reader selling high-ticket products to UK buyers from a US or EU supplier, nearly every order clears £135. That means the VAT line you may have shown at checkout is gone, and your customer can meet VAT, duty and a courier fee at the front door instead.
If you are new to the model, start with my guide to high-ticket dropshipping. Below: exactly what Shopify changed, when merchants first noticed, what the numbers look like on a typical big-ticket order, and five moves to make before your next UK sale.
Selling across borders gets simpler when your US entity is set up right, and the best LLC formation service for ecommerce owners is Northwest Registered Agent. Northwest does not sell your address and puts its own address on your public filings, which is why I’d form an LLC there instead of at a cheap formation site that upsells you later. Form your LLC with Northwest →
Shopify UK VAT Now Follows Fulfillment Location on £135+ Orders
Shopify’s Oct. 23 changelog entry says UK VAT on orders shipping to Great Britain is now based on the fulfillment location chosen by your order routing settings. Shopify says that is the same way it calculates tax for US orders.
The rule works like this. An order over £135, measured before tax and shipping, that routes to a non-UK location is treated as an import, so no VAT is charged at checkout. Shopify says this applies even if your store has a UK location.
Three groups are untouched, per the same entry: orders of £135 or less, orders shipping to Northern Ireland, and existing orders. To keep charging VAT at checkout on the affected orders, Shopify gives two options. Route those orders to a UK location, or collect duties and import taxes at checkout.
When the change actually started
The changelog does not say when the new logic went live. A merchant posting as Makeit in a Shopify Community thread opened Oct. 4 dates it to Sept. 29, 2026, about 24 days before the changelog post.
Makeit describes itself as a Swedish company registered for UK VAT that ships delivered-duty-paid from one warehouse in Sweden and acts as importer of record. Shopify Tax had charged 20% UK VAT on all its UK orders. The company added an active UK location in November 2024 following Shopify’s own guidance, and that location never held stock or shipped an order. The setup worked until Sept. 29, and Makeit says it found out a couple of days later.
Per Makeit’s account of its support chats, Shopify told it the logic changed on Sept. 29 and was not announced because the expected impact was “considered small.” That is secondhand. The thread names no Shopify staff and gives no ticket numbers, and no other merchant in its 15 posts reported the same problem.
What merchants say they were told about fixes
Makeit reports three details that matter if you are choosing a fix. First, support said the “Collect duties and import taxes at checkout” feature is not meant for collecting UK VAT alone, even though Shopify’s UK tax article still lists it as an option. Second, Makeit says its admin shows a 0.5% transaction fee on that feature. Third, support called manual UK VAT rates a “temporary workaround” without saying whether that will change.
Makeit’s own working fix since early October is manual UK VAT rates, verified on real orders above and below £135, plus turning on the setting that charges tax on shipping. Treat all of that as one merchant’s report, not Shopify policy.
What the UK rules say
HMRC’s guidance on overseas goods sold to UK customers says that for consignments over £135, “normal VAT and customs rules will apply on importation of the goods into Great Britain from outside the UK.” For consignments of £135 or less, “the seller must charge and account for VAT at the point of sale.” A UK VAT-registered business buyer who supplies a valid VAT number can be handled under the reverse charge instead.
Shopify’s own UK tax reference lines up with that. For orders over £135, VAT may not be collected at the point of sale, and the importer usually remits VAT and duties.
From the 2021 £135 Rule to Order Routing: How Shopify Got Here
Shopify’s Dec. 31, 2020 changelog, effective Jan. 1, 2021, told merchants shipping into the UK from outside it to collect and remit VAT on orders not exceeding £135. For orders over £135, Shopify wrote that they “will continue to exclude all taxes.”
So the default for big orders has always been no checkout tax. What changed this fall is that a UK location or UK registration no longer overrides that default when the order itself ships from abroad. Routing now decides, which is also how US tax works.
Landmark Global, a cross-border logistics provider, explains the practical side. The £135 threshold applies to the total consignment value, not to each item. Above it, the buyer generally pays import VAT and duty on delivery, often through the courier, which may recover the amount from the recipient with an admin fee.
Landmark also notes that the government announced at the Autumn Budget 2025 that it will remove customs duty relief on low-value imports by March 2029 at the latest. The page says that is confirmed but not yet in force.
The counterpoint
There is a fair case that Shopify simply aligned checkout with the law. HMRC’s guidance puts VAT on a non-UK shipment over £135 at importation, so a checkout that charged VAT on those orders was collecting something the rules handle at the border. One routing-based rule, applied the same way Shopify handles US orders, is also easier to audit.
The objection is about timing and communication. Merchants who built DDP flows around a UK location found out from lost revenue, not a notice, and Shopify posted the entry about 24 days after Makeit says behavior changed. I covered a related duties change when Shopify ended pay-later duties in August, and the pattern is the same: the platform moves toward the legal default and merchants carry the cleanup.
On the same day, Shopify also began charging tax on US return shipping fees, which I broke down in my post on Shopify Tax and return shipping fees. Two tax logic changes in one day is a reason to read the changelog weekly.
UK VAT Gap on £135+ Orders: What It Costs a High-Ticket Store
My read is that this change hurts high-ticket sellers more than anyone, because high-ticket orders almost never sit under £135. A cheap-gadget store lives in the checkout-VAT zone. A store selling furniture, e-bikes, spas or equipment lives in the import zone, and the only question is who pays at the border.
Here is the hypothetical math. Take a £900 outdoor furniture set shipping to Great Britain from a US supplier. At the 20% rate Shopify Tax applied in Makeit’s thread, VAT is £180. The gross margins I teach on high-ticket stores run 20% to 30%, so that same order grosses £180 to £270 before ad spend and freight. If you are DDP and absorb the VAT, you just gave away the low end of your margin on one order. These figures are invented to show scale, not reported results.
Three scenarios, by threshold
Order at £135 or less: nothing changes. You charge UK VAT at checkout and remit it, as HMRC requires, and Shopify’s UK tax setup keeps handling it if you hold a registration.
Order over £135 routed to a UK location, such as a UK warehouse or a UK 3PL: Shopify still calculates VAT at checkout, because the order ships from inside the UK. If your supplier can stock a few fast movers in a UK warehouse, this is the cleanest path.
Order over £135 routed outside the UK: no checkout VAT. If you ship delivered-duty-unpaid, your customer pays at delivery. If you promised delivered-duty-paid, you pay the import VAT yourself and need a way to recover or price it in. Whether you can reclaim it depends on your registration and on who is importer of record, which is a question for a UK VAT adviser, not for me.
Where the cash and the chargebacks go
The DDU scenario is where stores get hurt without noticing. A buyer who agreed to £900 and gets a £180 bill plus a courier admin fee at the door may refuse the parcel. On a heavy item you then pay outbound freight, return freight and a restocking argument. Buyers who keep the parcel may still dispute the charge later, so my guide to chargeback prevention for high-ticket stores applies directly. Say the possible import charges on the product page and in checkout, in plain words, before the card is charged.
If you take UK money, hold it in the right currency. A multi-currency account such as Wise lets you receive and pay in GBP without a bad conversion on every order. If your volume is higher, my walkthrough on setting up Airwallex for a cross-border high-ticket store covers the fee traps.
The Airwallex link is where I’d start for the account itself.
Books, entity and the tax adviser
This also hits your bookkeeping. Orders that used to carry checkout VAT now carry none, so your sales tax reports and your import VAT receipts stop matching unless someone reconciles them.
A2X pushes Shopify payouts into your accounting software in clean summaries. Pair it with Xero, which I’d pick for multi-currency books.
QuickBooks works too if your accountant already lives there. Finaloop is the option I’d look at if you want a service doing the monthly close.
UK VAT registration attaches to a legal entity, so a clean US company matters before you start filing abroad. My overview of how to form your business is the place to begin. My guide to getting a business address without renting an office covers the address piece. I am not a tax or legal adviser, so take VAT registration questions to a UK-qualified accountant.
The wider pattern matters too. Tariffs, de minimis changes and parcel rules are all moving. The CBP proposal for bonds on low-value imports is one example. The EU rule on product identifiers for parcels is another.
Cross-border selling in 2026 rewards the store that knows its importer of record on every lane. That is a lot of moving parts for one operator, which is why owners hand the build and the compliance details to my team through the turnkey done-for-you service.
Cross-border tax rules quietly eat margin when nobody owns the details. Want my team to scale the store you already have? See the scaling service →
Five Moves to Fix Shopify UK VAT on £135+ Orders
Five actions, in this order, before your next UK sale:
- Pull the damage report. Export your orders shipped to Great Britain since Sept. 29 and filter for a subtotal over £135 and zero tax. A participant in the Shopify thread suggested a Shopify Flow alert for the same pattern so you catch a repeat. Hand the list to your accountant.
- Choose DDU or DDP per product line. For heavy, expensive items, DDP with the VAT priced in usually protects the customer experience. For low-margin lines, DDU with loud warnings may be safer. Make the choice on paper before touching a setting.
- Change routing or the checkout setting that matches your choice. If you want VAT at checkout, route those orders to a UK location, as Shopify says. If you use “Collect duties and import taxes at checkout,” open your admin and read the fee first, because Makeit reports 0.5%.
- Rewrite the product page and checkout copy. State who pays VAT, duty and any courier admin fee, and when. A Easyship account can show landed-cost estimates by destination, which gives you real numbers to quote.
- Get importer-of-record terms in writing. Ask your supplier or 3PL who declares the goods into Great Britain, and what they charge. Then book a fifteen-minute discovery call with my team if you want help mapping the lanes. Grab my free high-ticket niches list if UK demand is pushing you to test a new category.
Set a calendar reminder to read Shopify’s changelog every Friday. Two tax logic changes landed on the same day this month, and the 24-day gap before the UK entry is the kind of thing that costs real money.
Frequently Asked Questions
Does this change affect orders to Northern Ireland?
No. Shopify’s changelog lists Northern Ireland orders, orders of £135 or less and existing orders as unaffected.
Does it change anything for orders of £135 or less?
No. HMRC says the seller must charge and account for VAT at the point of sale on those orders, and Shopify’s change leaves that path alone. My guide to payment processors for small business helps if you need to settle GBP sales cleanly.
Does a US warehouse or US supplier count as a non-UK location?
The changelog says orders routed to a non-UK location are treated as imports, which on its face includes the US. Shopify’s UK tax page does not address US sellers specifically, so confirm with Shopify support before you rely on it.
Do I need a UK VAT registration to sell to Great Britain?
It depends on where the goods are when you sell them and who buys. HMRC says sellers who own goods in the UK at the point of sale must register, and sellers who sell only to UK VAT-registered businesses from outside the UK do not. Ask a UK-qualified adviser, and see my first-year budget for high-ticket dropshipping to plan for the cost.
What is an importer of record?
It is the party legally responsible for declaring goods at the border and paying import VAT and duty. In a DDP flow that is usually you or your logistics partner, and in DDU it is the customer.
Will UK customs duty rules change soon?
Landmark Global says the government announced it will remove customs duty relief on low-value imports by March 2029 at the latest, and that this is not yet in force. VAT rules apply in the meantime. For shipping costs on every lane, my beginner’s guide to ecommerce shipping is a good checklist.
Should I keep my payment setup flexible while rules shift?
Yes. A second processor and a second currency account are cheap insurance, as I argued in why your payment processor is a single point of failure.
Not sure whether your UK orders are DDU or DDP today? Want 1-on-1 coaching to fix the cross-border setup on your high-ticket store? Get the coaching details →
Start with the order export today, since that is where the money is. Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.
Related Articles
If this was useful, these go deeper:
- Shopify Taxes Return Shipping Fees Starting Oct. 23
- Shopify Killed Pay-Later Duties Yesterday
- EU Makes Product IDs Mandatory on Parcels From Nov. 1
- CBP Proposes Bonds for Every Low-Value Import
- How to Open a Mercury Account in 2026: The Full Application Walkthrough
Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.
