Brexit Timeline and Transition Milestones
The path to Brexit began with a national referendum on June 23, 2016, in which 52 percent of UK voters opted to leave the EU. The UK then entered into a period of negotiation with the EU, culminating in the withdrawal agreement. Although the UK legally exited the EU on January 31, 2020, a transition period remained in place until the end of that year to allow businesses and governments to prepare for new rules.
During the transition period, trade continued under EU rules, and companies had time to adjust to upcoming regulatory changes. After the transition ended, the UK ceased to be a member of the EU single market and customs union. This marked a fundamental change in how goods, services, and data flowed between the UK and EU member states.
Trade Becomes More Complex for eCommerce Sellers
Prior to Brexit, trading with the UK from within the EU was as seamless as doing business domestically. Goods moved freely without customs declarations, tariffs, or border delays. This enabled eCommerce companies to offer fast shipping, clear pricing, and integrated logistics. All that changed when the UK left the customs union.
Now, goods entering the UK are treated as imports. This means businesses must submit customs declarations, determine product classification codes, and calculate duties and taxes on every shipment. Even lower-value shipments that were once exempt are now scrutinized under new regulatory regimes.
For companies accustomed to the simplicity of intra-EU trade, these new steps can feel daunting. The additional documentation and compliance checks add both time and cost, making once-profitable transactions more complex and less efficient.
New Tax Landscape: VAT Becomes a Central Issue
Among the most significant post-Brexit changes is the introduction of new value-added tax (VAT) rules. Previously, EU-based businesses could account for VAT using the EU’s distance selling thresholds, simplifying the process across borders. Now, however, all goods imported into the UK from abroad are subject to UK VAT.
For items valued above £135, VAT is due at the point of import. For goods below this value, VAT can be collected at the point of sale, but it still needs to be reported and submitted to the appropriate tax authorities. This shift creates several operational challenges.
Sellers must decide whether to absorb the VAT cost or pass it onto the customer. Absorbing VAT reduces profit margins, particularly for businesses with low-margin products or high volume sales. On the other hand, passing the cost onto consumers risks increasing checkout abandonment, as buyers may be deterred by unexpected costs.
Beyond the financial impact, eCommerce businesses must also ensure that their digital platforms can handle the new VAT rules. This includes properly configuring tax settings in their eCommerce software and integrating accurate data into accounting platforms. Failure to comply can result in delayed shipments, fines, or even loss of market access.
Legal and Regulatory Divergence Post-Brexit
One lesser-discussed consequence of Brexit is the growing legal and regulatory divergence between the UK and the EU. While both parties initially retained similar standards, the UK is now free to introduce its own regulations. This creates a moving target for businesses that operate on both sides of the channel.
Take product compliance, for example. Before Brexit, goods needed to meet EU-wide standards, such as CE marking for electronics and toys. Now, products sold in the UK may also need to meet separate UK-specific requirements, including new safety standards or packaging regulations. These requirements can vary across product categories, adding layers of administrative complexity.
This is particularly relevant for private label eCommerce brands or manufacturers with unique SKUs. If a business must update labels or test products twice for dual compliance, it increases production costs and slows down time-to-market. Additionally, divergent rules create inefficiencies in supply chains and inventory management.
Freedom of Movement Ends and Labour Markets Tighten
Another significant area affected by Brexit is the movement of labour. Prior to Brexit, EU nationals could work freely in the UK, making it easier for businesses to fill roles in warehousing, fulfilment, and customer service. The end of free movement has disrupted this labour pool and created staffing shortages in several industries critical to eCommerce.
Now, EU citizens must apply for visas if they wish to work in the UK long term. This requirement has caused a noticeable reduction in available labour, particularly in logistics and distribution. With fewer drivers, warehouse operatives, and customer service representatives, delivery times have increased, and wages have climbed due to tighter supply.
For eCommerce companies, the ripple effects are considerable. Labour shortages can slow fulfilment operations, increase costs, and limit scalability. Businesses dependent on timely product delivery may face reputational damage if delays become routine.
Increased Burden of Customs Declarations
In addition to VAT, Brexit introduced the requirement for customs declarations on goods moving between the EU and UK. Every shipment must now be accompanied by a commercial invoice that outlines the product’s value, origin, and classification code.
This process is straightforward in theory but complicated in practice. Inaccurate information can lead to delays, penalties, or seized goods. Small errors—such as the wrong HS code or incomplete documentation—can disrupt the entire delivery timeline.
Many eCommerce sellers are turning to customs brokers or third-party logistics providers to help navigate this terrain. However, this service comes at a cost, further eroding margins. Even with expert assistance, the time involved in compiling data, monitoring shipments, and responding to customs inquiries represents a significant operational shift.
Border Delays and Delivery Disruptions
With new customs requirements come inevitable border delays. Unlike the free movement of goods under EU membership, products now face inspection when entering or leaving the UK. These checks can range from simple document reviews to physical examinations of parcels.
Backlogs at borders have become more common, especially during peak seasons. For businesses shipping perishable items, any delay could lead to spoilage. For others, it means longer delivery times, more customer complaints, and rising return rates.
Online shoppers in the UK are sensitive to delivery timelines. When expectations are not met, customers often turn to competitors with faster and more reliable service. This places additional pressure on businesses to communicate clearly, offer tracking, and build buffer time into their delivery estimates.
Shifting Inventory and Fulfilment Strategies
In response to new cross-border challenges, some companies have restructured their fulfillment strategies. One common approach is to hold inventory within the UK to avoid customs delays and reduce delivery times. While this simplifies logistics, it introduces new costs and risks.
Warehousing in the UK requires investment in infrastructure, whether through leased space or partnerships with fulfilment providers. Businesses must also consider the cost of domestic shipping, insurance, and inventory management. In addition, fluctuating demand and unpredictable shipping timelines can make inventory planning difficult.
Alternatively, some sellers have opted to exit the UK market altogether, choosing instead to focus on EU markets where trade remains simpler. This approach may reduce compliance burdens but also sacrifices access to a major consumer base.
Customer Experience in a Post-Brexit World
Customer expectations in the UK remain high. Despite regulatory changes, buyers still expect fast, affordable, and reliable shipping. When new fees, delays, or unclear return policies enter the equation, customer satisfaction tends to drop.
To maintain trust, sellers must be transparent about shipping timelines, taxes, and return processes. Including estimated delivery times at checkout, disclosing potential customs fees, and offering proactive communication when issues arise can go a long way in managing customer relationships.
Localization also matters more now. Websites, customer service, and policies should reflect the unique needs of UK customers. Businesses that invest in understanding this market and tailoring their approach will find themselves better positioned to retain and grow their customer base.
The Strategic Importance of Compliance
For eCommerce companies navigating Brexit, compliance is no longer optional. It is now a strategic function that supports customer experience, brand trust, and operational continuity. Staying current with changing regulations, maintaining accurate tax records, and working with specialists when needed are essential to surviving and thriving in this new environment.
As businesses learn to adapt, some will treat compliance as a burden. Others will see it as a competitive advantage. The latter group will be the ones best equipped to build resilient, scalable operations in the years ahead.
Post-Brexit Taxation and Documentation Challenges
The UK’s withdrawal from the European Union brought with it a wave of regulatory and tax-related changes that fundamentally altered the operational landscape for eCommerce businesses. We explored how Brexit disrupted trade flows, altered labour dynamics, and increased logistics complexity. In this second installment, we dive deeper into one of the most significant and technically demanding aspects of the post-Brexit world: value-added tax (VAT) compliance and regulatory documentation.
As businesses adjust to new cross-border realities, many are encountering barriers that stem not from customer demand or product-market fit, but from a rapidly evolving tax and documentation framework. This section will equip online retailers with a clear understanding of how VAT now works, what paperwork is required for UK trade, and how to remain compliant while minimizing disruption.
VAT Before and After Brexit: A Structural Shift
Before Brexit, businesses in the EU could benefit from the single market’s common VAT regime. This allowed companies to register for VAT in their home country and then sell across borders with fewer reporting obligations. For example, an eCommerce merchant based in Germany could ship to customers in the UK while only worrying about local VAT thresholds and declarations under EU distance selling rules.
However, those rules no longer apply. Now that the UK is a third country to the EU, goods shipped from outside the UK into its market are treated as imports and subject to UK-specific VAT laws. This structural shift brings with it several implications, particularly for overseas sellers.
Understanding the £135 Threshold for UK Imports
One of the central changes is the introduction of a £135 consignment threshold. Goods imported into the UK with a value up to and including £135 (excluding shipping and insurance) are no longer subject to VAT at the border. Instead, VAT must be collected at the point of sale and then remitted to Her Majesty’s Revenue and Customs (HMRC).
For goods valued above £135, import VAT becomes payable at the time the goods enter the UK. In such cases, the recipient of the goods is typically responsible for settling the VAT unless the seller arranges to pay it on their behalf. These mechanics have introduced operational headaches for sellers unfamiliar with the UK tax system.
eCommerce businesses must now build systems that:
- Determine product value at the point of sale
- Apply the correct VAT rate (typically 20 percent for standard-rated goods)
- Remit the collected VAT to HMRC
- Include VAT charges in checkout displays or invoices, depending on the business model
Failure to meet these obligations can lead to blocked shipments, unhappy customers, and compliance penalties.
Registering for UK VAT as a Non-Resident Business
For non-UK eCommerce sellers, VAT registration is now a legal necessity. If you sell to UK consumers and hold stock in the UK or if you are responsible for collecting VAT on sales under the £135 threshold, you are required to register with HMRC.
Registering for VAT involves:
- Submitting an application to HMRC
- Providing identification and business documentation
- Waiting for VAT number approval, which can take from a few weeks to several months
- Understanding your reporting frequency (monthly, quarterly, or annually)
Once registered, businesses must charge UK VAT at the appropriate rate, file VAT returns, and maintain detailed records of their transactions. This includes invoices, proof of shipping, and VAT calculations.
Charging VAT at the Point of Sale
A significant implication of the new rules is that sellers must now collect VAT directly from customers at the time of purchase if the goods fall below the £135 value threshold. This differs from the traditional model where VAT is charged at customs and paid by the importer or customer.
eCommerce platforms must therefore be able to apply UK-specific tax calculations. Many platforms now offer tax modules or plug-ins that can handle regional VAT rates, but it is still up to the seller to ensure accuracy.
A failure to include VAT in the customer’s invoice can lead to shipping delays, additional fees, or rejection at the border. Conversely, overcharging or misapplying VAT may create reconciliation problems and lead to fines or audit issues with HMRC.
How to Handle VAT Returns
Once registered, your business is required to file periodic VAT returns with HMRC. These filings typically include:
- Total sales to UK customers
- Total VAT collected
- Any import VAT paid
- Deductions or refunds claimed
- Net VAT owed or recoverable
Returns must be filed even if there is no VAT due, and they must adhere to strict deadlines. Missing a filing or providing inaccurate data can result in penalties. For most businesses, the filing schedule is quarterly, though the frequency may vary based on turnover and business size.
Keeping accurate records is essential. Businesses must retain:
- Copies of all invoices (sales and purchases)
- Shipping documents and customs entries
- Records of VAT paid and received
- Correspondence with HMRC
Many eCommerce sellers choose to work with accountants or VAT compliance services to handle their filings, especially as they expand into multiple tax jurisdictions.
What is an EORI Number and Why Do You Need It?
The Economic Operators Registration and Identification number (EORI) is another critical requirement for businesses trading across UK borders. This identification number is used by customs authorities to track shipments, verify compliance, and link import/export activity to specific businesses.
Without an EORI number, you cannot clear goods through customs. Even if your business is registered for VAT, the lack of an EORI will cause delays and may result in fines or seizure of goods. EU-based businesses may already have an EORI issued by their local customs authority, but this number will not be valid in the UK. A separate UK EORI must be obtained through HMRC.
Applying for a UK EORI number is a relatively straightforward process. You will need:
- A VAT number (or application in progress)
- A registered business address
- Relevant business details (such as company number and type)
Processing times vary, but it typically takes up to five business days to receive your EORI.
Customs Declarations and Classification Codes
Every cross-border shipment now requires a customs declaration form. This document must include:
- A description of the goods
- The product’s classification code (also known as a commodity code or HS code)
- The country of origin
- The value of the goods
- The applicable VAT or customs duty
Choosing the correct commodity code is essential. Misclassification can lead to underpayment or overpayment of duties and taxes, and customs authorities may impose penalties for repeated errors. The UK government maintains a database of codes, but due to the complexity of some product categories, businesses often consult with customs specialists to ensure accuracy.
Importance of Commercial Invoices
All international shipments to the UK must be accompanied by a commercial invoice. This document serves as the primary reference for customs authorities and must contain complete and accurate information. A commercial invoice typically includes:
- Seller and buyer details
- EORI numbers
- Detailed product descriptions
- Quantity, unit price, and total value
- Delivery terms (e.g., DDP or DAP)
- Incoterms and payment method
If the invoice is missing or incomplete, the shipment will likely be delayed at customs, returned to the sender, or subjected to penalties.
Delivery Terms and Incoterms: Defining Responsibility
One of the most overlooked issues in post-Brexit trade is the importance of incoterms—the international rules that define who is responsible for shipping, customs duties, and taxes. Two of the most common incoterms for eCommerce are:
- Delivery Duty Paid (DDP): The seller is responsible for all costs and risks until the goods arrive at the buyer’s location.
- Delivery at Place (DAP): The seller ships the goods, but the buyer is responsible for import taxes and duties upon arrival.
Choosing the right income is vital for setting customer expectations. Many buyers prefer DDP, as it removes uncertainty about fees. However, it places a heavier administrative burden on the seller. Choosing DAP may seem easier, but it risks damaging the customer experience if buyers are hit with unexpected charges.
The Need for Cross-Functional Coordination
Navigating VAT and customs regulations requires collaboration across your business. Sales, finance, operations, and customer service teams must align to ensure consistent, compliant practices. For example:
- Finance must track VAT obligations and maintain accurate records
- Operations must prepare customs documentation and manage import procedures
- Customer service must explain VAT charges and shipping policies to customers
Without strong coordination, errors are likely to occur, leading to shipment delays, frustrated customers, or tax compliance failures.
Preparing for Ongoing Change
Brexit was not a single event but a continuing evolution. Regulations are still being interpreted, and additional trade agreements or legislative changes may be introduced over time. Businesses must stay agile, regularly review compliance policies, and be ready to adapt to new rules.
Subscribing to government updates, engaging with trade groups, and working with tax professionals are all ways to stay ahead of potential changes. While the initial shift may be complex, businesses that build robust compliance frameworks will be in a better position to grow within the UK market.
Post-Brexit Operational Challenges
As the UK continues to redefine its trade relationships post-Brexit, eCommerce businesses find themselves navigating new logistical hurdles, particularly in the areas of shipping, delivery, and inventory management. We explored the broader trade environment, tax implications, and compliance measures businesses must understand in the post-Brexit era. In this final installment, we focus on how Brexit has affected fulfilment operations and explore the proactive measures businesses can take to minimise disruption and maintain customer trust.
The departure from the EU has introduced customs controls, altered delivery expectations, and created unpredictable lead times. These shifts have rippled throughout the eCommerce supply chain, prompting merchants to rethink everything from warehousing to returns management. This part outlines key challenges and opportunities in managing cross-border eCommerce in a world shaped by Brexit.
Shipping Delays and Border Backlogs
One of the most immediate and visible consequences of Brexit has been the slowdown in cross-border shipping. With the reintroduction of customs controls between the UK and EU, goods are now subject to documentation checks, inspections, and customs clearance processes that did not exist prior to 2021.
This has created congestion at key border points such as Dover and Calais, where goods frequently queue for inspection. While efforts have been made to streamline these procedures, delays remain common, particularly during peak shipping seasons.
The impact on eCommerce businesses includes:
- Slower delivery timelines for international shipments
- Increased customer service requests regarding delivery status
- Higher likelihood of goods being held or returned due to documentation issues
Longer shipping durations can lead to lost sales, customer dissatisfaction, and increased refund requests. Customers today are accustomed to fast, often next-day delivery, and the extended wait times caused by customs can erode brand loyalty quickly.
Dealing With Increased Shipping Costs
Shipping goods between the EU and UK has become more expensive. Carriers have introduced Brexit surcharges to account for the added time, labour, and complexity involved in processing shipments. These additional charges are often passed on to the seller and, in some cases, the end customer.
Moreover, international shipping now involves more coordination. Businesses must budget for:
- Customs broker fees
- Tariffs and duties
- Carrier surcharges
- Potential penalties for incorrect declarations
The increased cost of cross-border logistics means that profit margins are thinner, especially on low-cost items or small orders. Businesses are faced with difficult decisions: whether to absorb the cost, increase product pricing, or introduce order minimums for international customers.
How Fulfilment Strategies Are Evolving
Many eCommerce businesses that previously shipped goods internationally from a single warehouse are now re-evaluating their distribution models. Brexit has made centralised fulfilment less efficient when servicing customers in the UK or EU exclusively.
To adapt, some companies have adopted distributed warehousing. This involves storing inventory in both the UK and EU to reduce the number of cross-border shipments and shorten delivery windows.
Advantages of this approach include:
- Faster local delivery times
- Lower customs-related risk
- Enhanced customer satisfaction
- Better scalability during promotional or seasonal campaigns
However, the model also comes with challenges. Businesses must invest in inventory management systems that provide real-time visibility across multiple locations. They also need to accurately forecast demand in each region to avoid overstocking in one warehouse while experiencing shortages in another.
Planning for Inventory Disruptions
Inventory planning has become significantly more complex since Brexit. Delays in receiving shipments, compounded by fluctuating demand and potential customs issues, make it harder for businesses to maintain the right stock levels.
To manage this, many retailers are now extending their lead times. Rather than relying on just-in-time inventory models, they are holding more safety stock to account for potential delays. While this improves resilience, it also ties up more capital and increases warehousing costs.
Forecasting tools and demand planning systems have become more critical than ever. By analysing historical trends, seasonality, and changes in buying patterns, businesses can better anticipate shifts in demand and adjust their procurement strategies accordingly.
Impact on Returns and Reverse Logistics
Returns management is a major factor in eCommerce success. Customers expect free and simple returns, but post-Brexit regulations have complicated reverse logistics for cross-border transactions.
Returning goods from the UK to the EU or vice versa now requires:
- Customs declarations
- Re-import documentation
- Payment or reclaim of VAT and duties
These requirements increase the cost and complexity of processing returns. In some cases, returned goods may even be subject to double taxation if the correct processes aren’t followed. Businesses must therefore decide how they will handle returns: will they process them domestically, resell returned items locally, or ship them back across the border?
Simplifying the return process, using local partners, or adopting refund-without-return policies for certain order types are becoming more common strategies. However, each of these comes with its own financial and operational implications.
Customer Communication in a Post-Brexit Market
Transparency has never been more important in eCommerce. With all the moving parts introduced by Brexit, customers need clear, consistent communication at every stage of the buying journey.
Key communication elements include:
- Shipping policies that explain expected delivery times and potential delays
- Checkout messaging that discloses duties, taxes, and handling fees (if applicable)
- Real-time tracking updates to maintain visibility during shipping
- Return policies that are region-specific and easy to understand
Setting proper expectations can reduce customer service tickets and increase post-purchase satisfaction. Moreover, proactive communication helps build trust. Even when things go wrong, customers are more forgiving if they feel well-informed and supported.
Managing Cross-Border Expectations
International customers often have different expectations than domestic ones. UK customers may now expect longer shipping times and higher prices from EU-based sellers, and vice versa. This shift requires a localisation strategy that extends beyond language translation.
Tailoring the shopping experience for each region involves:
- Currency conversion and payment methods
- Customised checkout experiences that reflect local tax and shipping rules
- Regionalised marketing campaigns that acknowledge post-Brexit realities
Rather than offering a one-size-fits-all experience, businesses that adapt their storefronts and communication by region are more likely to retain customers and grow in new markets.
Digital Tools to Streamline Fulfilment and Logistics
Technology plays an essential role in helping eCommerce businesses adapt to the logistical complexities introduced by Brexit. From order management to tax automation, digital tools are enabling leaner, more resilient operations.
Popular functionalities include:
- Multi-warehouse inventory management
- Automated customs declaration generation
- Real-time shipping rate calculators
- Integration with local carriers and couriers
- Rule-based routing for region-specific fulfilment
Investing in technology not only improves efficiency but also provides a better customer experience. For example, automated shipping notifications and customs clearance tracking can reassure buyers and reduce customer service inquiries.
Building a UK-Specific Fulfilment Network
For businesses with significant sales volumes in the UK, establishing a local fulfilment network may be the most effective way to bypass Brexit-related complications. This can take the form of partnering with a third-party logistics provider based in the UK or setting up a local warehouse.
Advantages of a local fulfilment network include:
- Domestic shipping speeds and costs
- No customs delays for UK-based customers
- Easier returns processing
- Local market responsiveness
However, this approach also requires careful consideration of cost, legal obligations, and tax requirements. Maintaining inventory in the UK necessitates UK VAT registration and regular compliance checks, and businesses may need to open local bank accounts or set up a local entity to manage operations effectively.
Avoiding Common Mistakes in the Post-Brexit Environment
As businesses adjust their operations, several common pitfalls can arise. Being aware of these can help avoid unnecessary disruptions:
- Failing to provide the correct customs documentation with shipments
- Charging the wrong VAT rates at checkout
- Underestimating delivery timelines and disappointing customers
- Not updating return policies to reflect new cross-border procedures
- Ignoring localised marketing and customer service requirements
Regularly auditing fulfillment and customer operations can help identify areas for improvement and ensure that your business remains compliant and competitive.
Training Teams to Navigate Change
Adapting to the new eCommerce landscape requires coordinated effort across multiple departments. Sales teams must understand the impact of new shipping timelines on promotions, operations teams must stay updated on customs procedures, and customer service staff must handle a greater volume of logistics-related inquiries.
Investing in team training is vital. Staff should be aware of:
- Customs and VAT requirements for different regions
- How to handle delayed or blocked shipments
- The procedures for processing returns under new regulations
- Customer communication best practices during fulfilment delays
Cross-functional collaboration ensures that information flows smoothly across your business and that everyone understands their role in maintaining operational continuity.
Future-Proofing Your eCommerce Supply Chain
Brexit is not the last major event to reshape global trade. The experience has taught eCommerce businesses the value of agility and preparedness. Going forward, companies must build supply chains and logistics operations that are resilient, flexible, and able to adapt to sudden changes.
Future-proofing strategies include:
- Diversifying suppliers across multiple regions
- Building strong relationships with logistics partners
- Maintaining buffer inventory during uncertain periods
- Automating compliance workflows to respond to regulatory changes
As regulations and trade dynamics evolve, the businesses that remain agile and informed will be in the best position to expand, retain customers, and scale internationally.
Conclusion
Brexit has reshaped the eCommerce landscape in profound and lasting ways. From the introduction of new VAT rules and customs declarations to shipping delays and fulfilment disruptions, businesses selling to or from the UK must now navigate a more complex and regulated trade environment. What was once a relatively seamless cross-border process has become a multi-layered logistical and financial challenge, requiring strategic planning, greater compliance, and operational agility.
We examined the foundational shifts caused by Brexit: the end of frictionless trade, new import-export classifications, and the limitations placed on labour movement. These macroeconomic changes have altered how goods move across borders and how teams are structured to support that movement.
We unpacked the intricate VAT rules that now govern UK trade, especially the £135 import threshold and the requirement for businesses to register for and collect UK VAT. The expansion of documentation—such as EORI numbers, customs declarations, and commercial invoices—has added to the administrative burden for eCommerce sellers. Remaining compliant isn’t just about avoiding penalties; it’s now central to ensuring smooth operations and preserving customer experience.
We explored the real-world implications on logistics and fulfilment, from border delays to the need for distributed warehousing and better inventory planning. Brexit has also created new challenges in returns management and customer service, requiring clear communication, localised operations, and investment in digital tools. Businesses that can adapt their shipping models and integrate UK-specific strategies are better positioned to thrive in this new environment.
Ultimately, while Brexit has introduced barriers, it has also revealed opportunities. Businesses that take a proactive approach—by investing in technology, training teams, and building region-specific operations—can not only preserve their UK market share but also expand it. The ability to stay compliant, communicate transparently, and adapt quickly to changing regulations will define the most successful eCommerce businesses in the years to come.
Brexit has tested resilience, but it also provides a moment for eCommerce companies to reset, retool, and rebuild smarter, more adaptable operations. Those that rise to the challenge will not only survive this era of change—they will lead the next phase of global eCommerce growth.