Shopify UK VAT now follows the fulfilment location

Shopify’s 23 October announcement makes order routing a practical VAT check for merchants shipping to Great Britain. For orders above £135 before tax and shipping, assignment to a fulfilment location outside the UK means Shopify treats the order as an import and does not charge VAT at checkout, even when the store also has a UK location.

The announcement leaves orders of £135 or less, Northern Ireland deliveries and existing orders unaffected. It describes the platform’s calculation behaviour, not a new tax exemption. Review how your stock actually reaches customers before changing settings.

Check the location selected at checkout

Shopify’s UK VAT guide says the relevant location is assigned at checkout. Changing it after an order is created does not recalculate VAT. A UK address in store details is not a substitute for an active fulfilment location with stock.

The same guide warns that split orders can be handled differently. For a basket over £135, test through checkout rather than relying on a draft order, which might lack a location when tax is calculated. Record the destination, assigned location and tax result so support can investigate a concrete example.

Inspect the rules before moving them

Open Settings → Shipping and delivery → Shipping → Order routing. Shopify’s routing instructions explain how to edit and reorder rules. Review which locations can fulfil online orders, their stock and shipping coverage.

Rules run in sequence. The default strategy first minimises split fulfilments, then prioritises the destination market and proximity. A nearby warehouse is therefore not the only factor. Before reprioritising a UK warehouse, confirm that it can genuinely dispatch the affected products.

Our suggested rehearsal is to compare an ordinary GB basket, an overseas-stock basket and a mixed-stock basket. Write down the intended fulfilment route before placing the tests. Check the actual assignment and checkout result together, rather than treating the presence of a UK location as sufficient evidence.

Duties collection needs a separate decision

The changelog lists collecting duties and import taxes at checkout as another option. That is not a universal instruction to enable it.

Shopify’s compatibility guidance says the feature collects applicable duties as well as taxes; it cannot collect only cross border taxes. It also requires suitable delivery duty paid arrangements when customers pay import charges at checkout, and can conflict with manual rates or tax overrides. Check the implications with your carrier, fulfilment provider and tax adviser.

If your business needs VAT-only collection or acts as importer of record under a particular arrangement, take that specific setup to Shopify Support and your adviser. Do not copy a workaround from another merchant without checking whether it matches your obligations and software configuration.

Give operations and finance the same evidence

Before peak trading, agree who reviews unexpected tax lines, who owns routing changes and who checks the accounting export. Keep a small record of test results and configuration changes. A customer-facing delivery promise should match the dispatch and import-charge arrangement you actually use.

Tactical-app highlighted the routing issue on 24 October. Its post is a useful practitioner reminder; Shopify’s documentation is the basis for the settings and limitations above.

Tactical-app’s UK VAT reminder, 24 October 2026

Read the original practitioner post.