UK VAT on digital services

Digital services sold to consumers in the UK are subject to UK VAT, and a business based outside the UK has to register for UK VAT and charge it from its first sale, because there is no registration threshold for businesses without a UK establishment. VAT is due where the consumer usually lives, so you need evidence that a customer is in the UK.

Rules as of 30 October 2026.

Which services count as digital services in the UK?#

HMRC treats as digital services those supplied automatically over the internet or another electronic network, with minimal or no human involvement. Examples include downloaded photos, e-books and PDFs, music, films and games, online magazines, web hosting, software and its updates, and advertising space on a website. Broadcasting and telecommunications services follow the same place-of-supply rules.

An automated online course counts as a digital service; a live webinar or a course with a live tutor doesn't. Advice a consultant or lawyer sends by email isn't a digital service just because it arrives by email, and neither are physical goods ordered online, printed books, or bookings for events or hotels. Physical goods follow the rules in the UK VAT guide.

How do you know a customer is in the UK?#

For a consumer, the VAT on a digital service is due where they usually live. HMRC's presumptions settle some cases: a download to a mobile phone is taxed in the country of the SIM card's country code, and satellite TV where the decoder is. Where a presumption applies, you don't need more evidence.

In other cases, keep two pieces of evidence about where the customer lives that don't contradict each other. HMRC accepts the billing address, the IP address of the customer's device, bank details, the SIM country code, the location of a landline and other commercially relevant information. One simple approach, aimed at small businesses that use payment providers, pairs the billing address or phone country code the customer gives you with the two-letter country code your payment provider reports. If they match, record them; if not, ask the customer.

Who registers and pays the VAT?#

A business outside the UK that supplies digital services to UK consumers must register for UK VAT whatever the value of its sales, then charge UK VAT and declare it on UK VAT returns. HMRC's registration guidance states that businesses without a UK establishment have no threshold, and names digital services among the supplies that trigger registration.

Registration is with HMRC, and the VAT goes on your UK VAT returns. A UK business selling to EU consumers is a business outside the EU and uses the EU's non-Union scheme or registers in each member state; see the EU digital services VAT guide.

What if you sell through an app store or platform?#

When a digital service is sold to UK consumers through an app store or online platform, the platform is treated as the supplier and accounts for the VAT if it sets the general terms, authorizes the charge to the customer, or handles delivery or download. Most platforms that sell third-party digital content fall into this.

A platform isn't liable for a third party's sale only if the supplier is named in the contract and on invoices or receipts and the platform does none of those things. A business that only processes payments isn't treated as a platform. If you sell through an app store that accounts for VAT, you don't charge UK VAT on those sales yourself, though you still do on sales from your own site.

What about business customers?#

A sale of digital services to a UK business is not charged UK VAT by an overseas supplier; the business accounts for any VAT due itself. A customer who gives you a valid UK VAT registration number can be treated as a business.

Without a valid VAT number, treat the customer as a consumer and charge UK VAT. HMRC lets you treat a customer who is in business but not VAT-registered as a business if you accept other evidence, such as a business website or commercial documents, but that is at your discretion and the evidence is yours to keep.

A worked example#

A US software company sells a monthly plan for £10 before VAT. A customer's billing address is in Bristol and the payment provider reports GB, so UK VAT applies at 20%: £2, for a monthly price of £12. With 500 UK consumer subscribers in a quarter, the company declares 500 × £2 × 3 = £3,000 of output VAT on its UK return. A UK company buying the same plan with a valid VAT number pays £10 and accounts for the VAT itself.

Standard VAT in the United Kingdom

border.bot live data from each country's official publications, updated 2026-10-11

For physical goods the landed cost calculator works out VAT and duty at the border, and the UK import guide covers the £135 rules.

Common questions#

Is there a threshold for UK VAT on digital services from overseas?#

No. A business with no UK establishment must register for UK VAT as soon as it makes taxable supplies in the UK, including digital services to consumers, whatever their value.

Does an app store collect UK VAT for me?#

Usually, yes. A platform that sets the general terms, authorizes the payment or handles delivery is treated as the supplier to the consumer and accounts for the VAT on those sales.

What evidence of location does HMRC accept?#

Two non-contradictory pieces of evidence, such as the billing address and the country code reported by your payment provider, or the IP address, bank details or SIM country code. Where a presumption applies, such as a SIM card's country code, you don't need more.

Sources#

• VAT rules for supplies of digital services to consumers (opens in a new tab), HMRC, last updated 28 March 2022
• Who should register for VAT (VAT Notice 700/1) (opens in a new tab), HMRC, updated 5 August 2026
• VAT rates (opens in a new tab), GOV.UK, accessed 30 October 2026