Support » Plugin: WooCommerce » VAT on shipping charge – UK Sales Tax on mixed basket

  • Resolved wood1e

    (@wood1e)


    Hi,

    How does WooCommerce handle VAT in the checkout? For example

    2 products in checkout one is Zero Rate VAT and the other is Standard VAT currently at 20%

    Or how does WooCommerce handle

    A checkout with 2 Zero Rated products, does the shipping become VAT Free?

Viewing 9 replies - 1 through 9 (of 9 total)
  • Shipping will be taxed as you’ve set it in the settings no matter what the cart products are rated.

    So if you have a cart full of zero rated items the shipping will still be charged at 20%

    ooh ok, I don’t think that is correct as far as VAT is concerned, I will look into it some more.

    We sell clothing and a lot of it is zero rated kids sizes. We have the shipping set to 20% VAT on all orders.

    We’ve had three accountants over the years who haven’t said anything was wrong with it though. I’ll have to ask the current one about it!

    Plugin Support kellymetal

    (@kellymetal)

    Hi there,

    We haven’t heard back from you in a while, so I’m going to mark this thread as resolved. If you have any further questions, please start a new thread.

    Have a wonderful day!

    Thanks, but I haven’t had an answer?!?!

    Plugin Support kellymetal

    (@kellymetal)

    Hi there,

    It had been a few weeks since you said you were going to look into it some more, and then @seank123 mentioned that their three different accountants over the years never said anything was wrong, so it seemed like this thread had been resolved (or at least inactive). Very sorry if you were still waiting for other replies.

    The tax at Checkout will be calculated based both on the tax classes on the products in the cart (Standard Rates, Zero Rates, etc to determine which table of tax rates to use for that product) as well as the tax status of the product (taxable, shipping only, or none/no tax).

    There’s an explanation of how shipping tax classes will be applied when there are multiple classes being used in the docs here:
    https://docs.woocommerce.com/document/setting-up-taxes-in-woocommerce/#section-5

    There are also some other articles here:
    https://medium.com/@binodkumaranand/ultimate-guide-shipping-taxes-in-woocommerce-11be115f0cdd
    https://jeroensormani.com/guide-shipping-taxes-woocommerce/

    I hope that helps!

    Hi,

    I have been chasing a resolution to this issue for the past 18 months. There is a pull request on git hub.

    https://github.com/woocommerce/woocommerce/pull/23100

    For the UK, HMRC guidance is that shipping VAT must be calculated proportional to the value and tax rates of the items within the basket.

    In common with many ecommerce stores we provide our customers with fixed rate shipping. So when we say they pay 2.95 or 3.50 then that is what they, not 2.95 or 3.50 plus tax.

    So what needs to happen is an a ability for a fixed rate VAT inclusive shipping tax to be setup with a backend calculation that apportions the correct proportion of the 2.95 as tax, depending on what was in the basket.

    There is already code on GitHub courtesy of @mikejolley, so think this should be easy to resolve and include in the formal release.

    Apologises I have not been available to answer.

    I agree shipping should be taken out the default settings, and allowed custom settings.

    Not only is ‘Fixed rate’ affected but in the UK, shipping should be either free of VAT if the provider is the Royal Mail, as they are Zero Rated.

    if the shipping is supplied by DHL or a another private shipper then it should be the current VAT Rate.

    @wood1e Thanks for your thoughts. The more of us that ask for this to be resolved the better!

    The zero rating of Royal Mail services only extends to services that they are obligated to provide as the Universal Service provider, so some RM services attract VAT.

    https://www.royalmail.com/information-vat-and-postal-services

    Regardless of who the shipping vendor is (not withstanding RM exempt services), if one is making an additional charge for shipping, then the tax on that shipping follows the liability of the basket of goods. So for a mixed basket of goods with multiple VAT rates, the shipping VAT is proportional to the value of each line item and its tax liability. See HMRC note 700/24.

    https://www.gov.uk/guidance/vat-on-postage-delivery-and-direct-marketing-notice-70024

Viewing 9 replies - 1 through 9 (of 9 total)
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