UK VAT now follows your fulfilment location: what to check

On 23 October 2026, Shopify changed how VAT is calculated on orders shipping to Great Britain. VAT is now based on the fulfilment location that your order routing settings select for each order, rather than simply on the fact that your store has a UK location. For UK merchants who fulfil some orders from warehouses outside the UK, this is worth understanding properly, because it can change whether VAT is charged at checkout. This guide sets out what Shopify has said, who is affected, and what to check.

What it is

Shopify describes this as an improvement to tax accuracy. VAT on orders shipping to customers in Great Britain is now calculated using the fulfilment location chosen by your order routing for each order. Shopify says this matches how tax is already calculated for orders shipping to the United States.

The practical effect is that two orders to the same UK customer could be treated differently depending on where each one is routed from.

How it works

The key rule involves the £135 threshold. If an order is over £135 before tax and shipping, and it is routed to a location outside the UK, Shopify treats it as an import. In that case, VAT is not charged at checkout, even if your store has a UK location.

Shopify offers two ways to charge VAT on these orders at checkout. You can update your order routing so that the orders are assigned to a UK location, or you can collect duties and import taxes at checkout. Shopify's Help Center has an article on charging VAT on orders over £135 in its UK tax migration guidance.

Limits and caveats

Three things are not affected. Orders of £135 or less are unchanged. Orders shipping to Northern Ireland are unchanged. Existing orders are also unchanged, so this applies to orders going forward.

The entry does not specify a plan or region restriction beyond Great Britain orders. It also does not describe how an order's routing is decided in your store, which is down to your own order routing settings. This guide is not tax advice, so speak to your accountant or tax adviser about your own position.

What it means for merchants

If all your UK orders are fulfilled from a UK location, you may see no difference. The risk sits with merchants who route some orders from locations outside the UK, such as a third-party warehouse or a stock location overseas. For orders over £135, those orders may now go through checkout without VAT, because they are treated as imports.

That has consequences beyond the tax line. Customers may see different totals than before, margins on higher-value orders can shift, and anyone reconciling VAT will need to understand why some orders have none charged at checkout. Higher basket values are common in fashion, streetwear and sportswear, particularly around seasonal drops, so it is worth checking how many of your orders sit above the threshold.

What it means for agencies and partners

For agencies, this sits between tax settings, order routing and checkout, and it is easy to miss because nothing about the store front end changes. It is worth raising with clients who use multiple locations or a warehouse outside the UK, and asking who in the business owns VAT decisions.

It is also a good moment to review order routing rules as a whole. Rules set up for speed or cost may now carry a tax effect that nobody intended.

How we would approach it

1. List every location in the store and note which ones are outside the UK.
2. Review your order routing rules to see which UK orders over £135 could be routed outside the UK.
3. Decide whether to route those orders to a UK location or to collect duties and import taxes at checkout.
4. Place test orders either side of the £135 threshold and check what is charged at checkout.
5. Confirm the approach with your accountant, and tell customer service what customers may see.

The short version

VAT on Great Britain orders now follows the fulfilment location chosen by order routing. Orders over £135 routed outside the UK are treated as imports, with no VAT at checkout. Orders of £135 or less, Northern Ireland orders and existing orders are unaffected. Review your routing, then either route to a UK location or collect duties and import taxes.

ETTA provides fractional ecommerce leadership for fashion, streetwear and sportswear brands. If you want a senior view on how this affects your store, get in touch.