WooCommerce VAT in the UK: the settings and the rules behind them

Registration is due when taxable turnover over the previous 12 months goes over £90,000, on a rolling basis. The threshold rose from £85,000 on 1 April 2024. Cross it and you have 30 days from the end of that month to register, with VAT charged from the first day of the second month: pass the line on 15 July, register by 30 August, charge from 1 September. A second test looks forward. Expect more than £90,000 in the next 30 days alone and the deadline is the end of those 30 days. Zero-rated sales count toward the figure, so a bookshop charging no VAT still counts every book. A business based outside the UK has no threshold and registers from its first taxable UK sale, unless everything it sells is zero-rated. Once a marketplace channel, a second company or exempt income enters the figure, an accountant has to make the call. None of that is a WooCommerce setting.

The standard rate is 20%, unchanged since 4 January 2011. HMRC puts children's car seats and domestic energy at the 5% reduced rate, and books, children's clothes and footwear and most food at 0%, each with conditions attached; pet food stays at 20%. A new WooCommerce install creates Reduced rate and Zero rate classes, but with empty rate tables. Under WooCommerce → Settings → Tax, give each class one row: country code GB, the other location fields left as the * wildcard, a rate of 20, 5 or 0, and Shipping ticked on the standard row. Then assign the class per product or variation. Unassigned means Standard. The shortcut to avoid is a single 20% row for the whole catalog. On a children's clothing store it taxes lines that should carry none.

For a consumer store, set "Prices entered with tax" to "Yes, I will enter prices inclusive of tax" and both display settings to Including tax. The Price Marking Order 2004, in the amended form in force from 6 April 2026, defines the selling price as the final price including VAT and all other taxes. Arithmetic points the same way. Enter £9.99 inclusive and WooCommerce works backward to £8.325 net and £1.665 of VAT, while the shopper sees £9.99 everywhere. Enter £8.33 exclusive and display it inclusive, and the shelf price becomes £10.00. Nobody picked that number. Exclusive entry is the worse choice wherever most buyers are consumers; it suits a trade-only catalog, where every buyer reclaims VAT and the Price Marking Order does not reach. A mixed store keeps inclusive entry and adds a price display suffix such as "inc. VAT", or {price_excluding_tax} to show the net figure. Accept Use recommended settings when WooCommerce offers it after the change; its documentation blames mismatched entry and display settings for unexpected rounding.

WooCommerce rounds VAT per line unless "Round tax at subtotal level, instead of rounding per line" is ticked. Section 17.6 of VAT Notice 700 tells retailers who calculate at line or invoice level never to round the VAT figure down, though each calculation may round up or down, and WooCommerce rounds to the nearest penny rather than truncating. Neither mode is the wrong one. Switching between them mid-period is, because orders either side of the change stop reconciling with your accounting software.

Under VAT Notice 700/24, delivery your terms require is part of a single supply and follows the VAT liability of the goods, itemised or not; delivery sold as an optional extra is always standard-rated. WooCommerce's default, "Shipping tax class based on cart items", taxes the whole delivery charge at 20% if any item in the cart is in the Standard class. A book and a mug in one basket pay standard-rate VAT on all of the shipping, since the code picks one class and never apportions. Where baskets like that are routine, splitting the charge takes a plugin or custom code.

For a seller outside the UK, £135 decides who collects the VAT. When the goods sit outside the UK at the point of sale and a consignment to Great Britain is worth £135 or less, the seller charges UK VAT at checkout and accounts for it on a UK return, so it registers with HMRC from the first sale. Above £135, normal import rules apply. The carrier bills the customer for import VAT and any customs duty before handing the parcel over, and sends it back if the bill sits unpaid for about three weeks. The limit covers the whole consignment. Two £75 items in one parcel are over it. Shipping and insurance stay out of the value when the invoice shows them separately. A business buyer who gives a UK VAT number pays no VAT and uses the reverse charge. WooCommerce's rate table cannot express any of this. Rates match on country, postcode and city, never on order value, so a GB 20% row taxes a £300 order exactly as it taxes a £30 one. That is the costly case: VAT taken at checkout, then import VAT billed again at the door. Splitting by value takes a plugin, custom code or a deliberate delivered-duty-paid model; duties and landed cost are covered under selling internationally. On 23 June 2026 the government said the customs duty relief for goods of £135 or less will end by October 2028, which changes duty and leaves the VAT rule alone.

Northern Ireland stays in the UK VAT system and, under the Windsor Framework, follows EU VAT rules for the movement of goods. A Great Britain seller shipping to Belfast changes nothing: WooCommerce treats the whole UK as one country, GB. Stock held in Northern Ireland is the different case. That business trades under an XI-prefixed VAT number and, once its sales of goods to EU consumers pass £8,818 (€10,000) a year, charges each destination country's rate, reported through the One Stop Shop Union scheme that HMRC runs. Its rate table then needs a row per EU country, as on the EU VAT OSS page.

The EU's Union scheme covers goods dispatched from one member state to another, and a parcel leaving Great Britain is an import into the EU, so it falls outside. On the UK side the sale is a zero-rated export under VAT Notice 703, provided you hold proof of export within three months. Parcels up to €150 can go through the Import One-Stop Shop, normally via an EU-based intermediary. Leaving the buyer to pay VAT on delivery is the cheaper setup to run and the one that produces refused parcels.

Since its first VAT period starting on or after 1 April 2022, every VAT-registered business has kept digital records and filed through compatible software. WooCommerce is not that software. It holds each order's VAT and rate, and its Analytics Taxes report separates order tax from shipping tax. VAT Notice 700/22 cares how those figures travel: a CSV export imported into accounting software counts as a digital link, copying dashboard totals into a spreadsheet does not. Spreadsheets qualify only through bridging software or a built-in API. The export has to keep rates separate and carry refunds with their VAT, or the return overstates output tax. Wiring orders and refunds into Xero or QuickBooks is covered in connecting the store to accounting.

Our free store audit checks these settings against your catalog: tax classes, inclusive entry, rounding, the shipping tax class, and whether the order export splits VAT by rate. It does not calculate what you owe, and we do not file returns. UK projects are invoiced in pounds at fixed prices, from £1,499 for Launch Setup; the rest is on pricing.