When you have a dropshipping business in the UK, you have to pay taxes. Three different types of taxes you may have to pay in the UK are VAT, Customs Duty Tax and the Income Tax.
You may need to consult with a lawyer who is experienced in the sales tax laws of the United Kingdom.
Do your own due diligence on any other taxes you may have for your UK dropshipping business.
Do I Have to Pay VAT Taxes
VAT stands for value added tax. Dropshipping VAT in the UK is a tax based on the goods of the business that’s being sold.
This is commonly referred to as sales tax in other countries like the United States.
VAT rate is usually 20% on most goods in the UK. You can click HERE to see VAT rates.
If you are eligible to pay VAT, you can register for a VAT number.
Most people just raise the price of their product to collect this tax and do it through something like Paypal or Shopify.
Do I Have to Pay Custom Duty Taxes?
Custom Duty Tax is a form of tax that must be paid on goods entering the UK.
The Custom Duty Tax is 2.5% for products above £135 and up to £630. If it’s less, then there is no charge. Click HERE to get more information.
To pay this tax, you have to register with the HMRC(HM Revenue and Customs) when you set up your dropshipping business in the UK.
Do I Have to Pay Income Taxes?
Income tax is collected by the UK government and is calculated as a percentage of the money you earn.
When your earn money from your dropshipping business, you have to pay income tax.
You can click HERE to learn more about the income tax rates.
Do I Have to Pay Taxes in the United States?
If you are a UK business owner selling products or services to residents of the US, you do not have to pay sales tax if you don’t have a supplier or remote employee in the US.
Conclusion
Dropshipping is a good way to make money online.
If you are having trouble getting started dropshipping, there is a free online training that will teach you everything you need to be successful.
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