Stripe UK VAT and the 135 GBP Limit in QuickBooks

A US business shipping physical products to customers in Great Britain gets a tax result that looks inconsistent until you know the rule behind it. A 120 GBP vase sold to Bristol has VAT on it in Stripe. A 180 GBP dinner set sold to Glasgow the same week has none. Both are correct.

The rule is the 135 GBP consignment limit. Since 2021, HMRC has moved VAT on low-value parcels from the border to the checkout. If the parcel is worth 135 GBP or less, the seller charges UK VAT at the point of sale and pays it to HMRC on a UK VAT return. If it is worth more, normal import rules apply and VAT is collected when the goods enter the country. Stripe Tax follows the same line: with a UK registration, it calculates VAT on the first kind of order and none on the second.

This guide covers which UK orders carry VAT in Stripe and why, how the limit is measured (it is not the checkout total), what reaches QuickBooks for each order, and how the quarterly UK VAT return relates to the liability account in your books. It is bookkeeping guidance, not tax or customs advice. Whether you need to register, and how your parcels are declared, are questions for your accountant and your carrier.

Start a free trial to bring Stripe Tax amounts into QuickBooks automatically, so the UK VAT you collect is already in your liability account when the return is due.

How the UK rule differs from IOSS

If you also sell into the EU, you may already know the EU's IOSS scheme and its 150 EUR limit. The UK version looks similar from the checkout, but it works differently in the books.

HMRC's guidance on overseas goods sold directly to customers in the UK says consignments worth 135 GBP or less, sold from outside the UK directly to customers in Great Britain, "will have UK supply VAT charged at the point of sale." For those consignments, "the seller must charge and account for VAT at the point of sale," unless the sale is to a UK VAT-registered business that has given its VAT number.

Three differences from IOSS matter for bookkeeping:

• It is not an optional scheme. IOSS is a simplification you can choose to join. In the UK, charging VAT at the point of sale on low-value consignments is simply the rule for sellers outside the UK.
• You register in the UK itself, and early. Stripe's UK tax guide says a business based outside the UK "must register in the UK within 30 days of performing the first taxable transaction there." Its threshold for a non-UK business is one transaction.
• It goes on an ordinary UK VAT return. There is no separate monthly import return. HMRC says you "usually need to send a VAT Return to HMRC every 3 months," and the deadline for filing and paying is "usually one calendar month and 7 days after the end of an accounting period."

Which orders carry VAT in Stripe

Stripe's default for goods shipped into the UK from abroad is to calculate nothing. Its UK guide says: "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."

A UK registration switches tax on for low-value parcels: "Stripe calculates VAT on imported low-value goods shipped into the UK in packages valued at up to 135 GBP, if you have a registration in the UK."

For parcels over the limit, Stripe's default stays in place. HMRC says that above 135 GBP, "normal VAT and customs rules will apply on importation of the goods." Stripe's guide adds that "if goods are imported in the customer's name, the sale is considered to occur outside the UK, and no UK VAT is due," and that import taxes and customs duties are something "Stripe doesn't calculate" in any case.

There is a separate setting for sellers who act as the importer themselves. Stripe's registration options include inbound_goods, which collects tax on cross-border sales of goods into the country where you add the registration. Stripe says businesses generally need to collect tax on these sales "if they act as the importer for customs purposes." That is a different arrangement from the low-value rule, and this guide does not cover it.

So for a US seller with a UK registration, selling to consumers in Great Britain:

Parcel	VAT in Stripe	Who pays VAT to HMRC	What your liability account sees
135 GBP or less	Yes, at the UK rate for the goods	You, on your UK VAT return	The VAT Stripe collected
Over 135 GBP	No, treated as an export	Collected at import, outside Stripe	Nothing

The cases that sit outside the table

UK business customers. HMRC says a seller "will not need to charge and account for VAT if the customer gives them their VAT registration number," and the business customer accounts for it under the reverse charge. HMRC also says a seller does not have to register for VAT at all if it only sells goods that are outside the UK at the point of sale to UK VAT-registered businesses. Stripe's UK page does not spell out how it treats a low-value goods sale to a business that has given a GB VAT number, so check the taxability reason on those orders in your export before you rely on them.

Northern Ireland. Stripe says Northern Ireland "applies its own special VAT rules" for goods and follows the EU's rules for them, and that "Stripe Tax doesn't support sales of goods to or from Northern Ireland." Orders shipped there need separate handling.

The Channel Islands, the Isle of Man and Gibraltar. Stripe lists these among territories outside the standard UK tax system, and says it "won't calculate tax for customers based there, even if you've added a registration for the UK."

Marketplace sales. If you sell the same goods through an online marketplace, Stripe notes that the marketplace operator typically collects VAT on goods imported "in packages valued at 135 GBP or less," and is treated "as if it were buying the product from the business and selling it to the customer" for VAT purposes. Those sales carry no UK VAT in your books. If you sell into the UK only through marketplaces that collect it, Stripe says you aren't required to register at all.

How the 135 GBP is measured

This is where most of the confusion comes from. The limit is not the amount the customer paid at checkout.

HMRC says the seller must work out the consignment value from its "intrinsic value," which is "the price the goods were sold for," not including transport or insurance costs (unless they are included in the price and not shown separately), and not including "any other identifiable taxes and charges." The VAT itself is left out. HMRC also says the limit "applies to the value of a total consignment that is imported, not the separate value of individual items," and that "unless sent individually, the seller must add the individual values of all items in a consignment together."

Two consequences follow:

• A checkout total over 135 GBP can still be a low-value consignment. A 120 GBP vase with 24 GBP of VAT and 15 GBP of separately shown shipping costs the customer at least 159 GBP. The intrinsic value is 120 GBP, so UK VAT at the point of sale still applies.
• Several cheap items can add up to a parcel over the limit. Two 70 GBP items in one box are a 140 GBP consignment, even though each item alone would qualify.

A worked quarter: five orders

Take a US ceramics studio with a UK VAT registration added in Stripe Tax. It prices its UK store in pounds and charges VAT on top of its prices. Most of what it sells is standard-rated, and the standard rate is 20 percent.

1. A mug set to Leeds, 40 GBP. One parcel, well under the limit. Stripe calculates VAT of 8 GBP. The order carries a tax line.
2. A vase to Bristol, 120 GBP plus 15 GBP shipping. The checkout total is 159 GBP before any VAT on the shipping. The intrinsic value is 120 GBP, so this is a low-value consignment, and Stripe calculates VAT of 24 GBP on the vase. Whether VAT is due on the shipping charge too is a question for your accountant; what matters here is that the shipping does not push the parcel over the limit.
3. A dinner set to Glasgow, 180 GBP. Over the limit. Stripe treats it as an export and calculates no tax. VAT and any duty are dealt with at import. The order has no tax line.
4. A bowl and a jug to Cardiff in one order, 70 GBP + 80 GBP = 150 GBP. Each item is under 135 GBP, but HMRC says the values of items in one consignment are added together, so this parcel is over the limit. Stripe's UK page talks about packages and does not say how it values a multi-item order. Its EU guide says Stripe "assumes that goods purchased together are shipped together," which would mean no VAT here. Check what Stripe actually charged on your first multi-item UK order before relying on that.
5. Two orders from the same Brighton customer, 90 GBP on Monday and 80 GBP on Wednesday, combined into one 170 GBP box on Friday. Stripe calculated VAT on each order when it was placed. HMRC warns that if a seller "makes changes to the value of the consignment so that its total value goes above £135," it may be liable for import VAT and customs duty and "have to adjust the VAT already accounted for at the point of sale."

Orders 1 and 2 are the normal case, and order 3 is the normal over-limit case. Order 4 is the one that generates "why is there no VAT on this?" questions. Order 5 is the one to design out of your packing process rather than fix in your books. The VAT on those two orders is already in your liability account, and combining them created a parcel the point-of-sale rule no longer covers. Keep low-value UK orders in their own boxes, and tell whoever packs them why.

What reaches QuickBooks for each order

For a United States QuickBooks company, Acodei's documented tax method is the Tax Product. You create a non-inventory product, such as "Sales Tax," mapped to a liability account, and choose it in Acodei's Stripe Tax settings. The documentation lists Stripe Tax enabled with Stripe Invoice or Stripe Checkout as the requirement. All Stripe Tax amounts on a sale are rolled into a single line on the QuickBooks invoice or sales receipt, and you use Stripe's tax reports to file and pay from the liability account. Acodei's documentation notes that QuickBooks' own Sales Tax Center does not let third parties create official tax rates for US companies, which is why the product approach is the one that works there.

Applied to the five orders:

• Orders 1, 2 and 5 reach QuickBooks with the sale and a tax line for the VAT Stripe calculated. That VAT lands in the same liability account as any US state sales tax you collect through Stripe Tax.
• Order 3, and order 4 if Stripe charged no VAT on it, reach QuickBooks as sales with no tax. Nothing goes to the liability account, but the sale is still revenue.

The result is a liability account that mixes taxes owed to different authorities on different calendars. US state sales tax follows each state's filing period. UK VAT follows your quarterly VAT accounting period. The balance on any given day is a blend of both, and only Stripe's reports can split it.

It also means UK revenue and UK VAT do not move together. If more of your UK orders cross 135 GBP, the VAT in the liability account falls while UK sales hold steady or grow. That is expected, not a sync gap.

Filing the UK VAT return from Stripe's data

Each quarter, the return needs the VAT you charged on UK sales in that period. Stripe's tax reports are the source. The itemized export breaks each line item out by jurisdiction and includes a taxability_reason column. It also includes non-taxable transactions unless you exclude them when you export, so orders like 3 and 4 appear there with no tax. Look at how your own over-limit and business-customer orders are labeled before you build the return from it. Stripe's zero tax page explains what each reason means.

Then check the currency. HMRC's VAT Notice 700 says that "for VAT purposes, amounts of money must always be expressed in sterling." Where you convert from another currency, it says to use "the UK market selling rate at the time of the supply," or, as an alternative, "the period rate of exchange published by HMRC for customs purposes." Stripe says that when the currency you price in differs from the filing currency, it "converts amounts using available exchange rates at the time of the transaction." If you price your UK store in pounds, the VAT figures are already in sterling. If you charge UK customers in dollars, confirm with your accountant that Stripe's conversion is acceptable for your return.

The other side of the currency question is in your books. A United States QuickBooks company carries its liability in dollars, but you pay HMRC in pounds. When you pay a quarter's VAT, clear the liability account by the amount you carried for that quarter's sales. Post any difference between that and what the payment actually cost in dollars to the account your accountant uses for currency gains and losses, not back to tax. Our Stripe multicurrency guide explains why QuickBooks and Stripe disagree about exchange rates in the first place.

Border charges on over-limit parcels are a separate question. If your shipping terms make you responsible for import VAT or duty, those arrive as carrier or broker bills, outside Stripe. The IOSS guide covers how to keep them out of the tax liability account, and the same approach works for UK parcels.

What to set up once, and what to check every quarter

Once:

• Confirm the UK registration is added in Stripe Tax, so low-value parcels to Great Britain are taxed at checkout.
• Write down the 135 GBP intrinsic-value rule for your fulfillment team: VAT and separately shown shipping are excluded, and items in one box are added together.
• Decide how you will handle Northern Ireland orders, which Stripe Tax does not support for goods.
• Decide, with your accountant, which account takes currency differences on VAT payments.
• Make sure whoever closes your books knows the liability account holds both US sales tax and UK VAT.

Every quarter:

• Export the period's UK transactions from Stripe Tax for the VAT return.
• Confirm over-limit orders and reverse-charge business sales are labeled the way you expect.
• Confirm the sterling conversion basis if you charge UK customers in another currency.
• Record the VAT payment against the liability account at the carried amount, with the difference to currency gain or loss.

For the two reports used above, see the glossary entries on the itemized export and the summarized export. If your UK customers include businesses with VAT numbers, our guide to Stripe customer tax IDs covers what those IDs change on an invoice.

Frequently Asked Questions

Does Stripe charge UK VAT on goods shipped from the US?

Only on low-value parcels, and only if you have a UK registration in Stripe Tax. Stripe calculates VAT on imported goods "shipped into the UK in packages valued at up to 135 GBP, if you have a registration in the UK." Otherwise it treats goods shipped into the UK from abroad as an export and calculates no tax.

Is the 135 GBP limit based on the checkout total?

No. HMRC measures the consignment's intrinsic value: the price of the goods, excluding the VAT itself and transport or insurance costs shown separately. A 120 GBP item with VAT and shipping on top is still a low-value consignment. The values of all items in one consignment are added together.

When does a US business need to register for UK VAT?

Stripe says a business based outside the UK must register within 30 days of its first taxable transaction there, so the threshold is one sale. HMRC says you don't need to register if you only sell goods located outside the UK to UK VAT-registered businesses. Selling only through marketplaces that collect the VAT also removes the need, according to Stripe.

Does Stripe calculate UK customs duty?

No. Stripe says cross-border sales of goods into the UK might be subject to import taxes and customs duties "which Stripe doesn't calculate."

Does Stripe Tax work for orders to Northern Ireland?

Not for goods. Stripe says Northern Ireland follows EU rules for goods and that "Stripe Tax doesn't support sales of goods to or from Northern Ireland."

How often is the UK VAT return due?

HMRC says VAT-registered businesses usually file every 3 months, and the deadline for filing and paying is usually one calendar month and 7 days after the end of the period. It is the same return a UK business files, not a separate import return.

One limit, measured at the parcel

The UK's low-value rule is straightforward once Stripe Tax knows about the registration. The bookkeeping trouble comes from treating every UK order the same. Parcels worth 135 GBP or less carry VAT you owe on your quarterly return. Larger parcels carry none in Stripe, because VAT is collected when the goods are imported. And the 135 GBP is measured on the goods in the box, not on what the customer paid. Read each order that way, keep combined parcels out of the low-value stream, and the liability account will tie to the return.

Start a free trial to sync Stripe Tax into QuickBooks automatically, so the quarterly UK VAT tie-out starts from a complete liability account.