Selling digital templates to customers in the US — any VAT or tax issues?

US sales do not automatically create a UK VAT charge, but track them separately from UK sales. For VAT, the place of supply matters. Digital templates supplied to customers outside the UK are generally outside the scope of UK VAT, rather than standard-rated UK sales. So even if you later become VAT-registered because your UK taxable turnover reaches the threshold, you would not normally add UK VAT to a genuinely US sale.

Do not simply add every US order to your UK taxable turnover and assume it brings registration forward in the same way as a UK sale. At the same time, monitor your UK turnover on a rolling 12-month basis, keep evidence of where each customer was based, and get advice promptly if the figures approach the threshold. A marketplace statement alone is rarely enough if HMRC asks how a sale was classified.

US tax is separate and state-by-state, not one federal sales tax. Many states tax some digital products, others do not, and downloaded templates can be treated differently from streaming or software-as-a-service. If you sell through a marketplace, that platform may have to collect and remit sales tax as a marketplace facilitator in states where it has that duty. That can remove much of the burden for those sales, but it does not automatically cover direct sales from your own website, so check the platform terms.

For direct sales, the key question is economic nexus: whether your sales into a particular state exceed that state's sales or transaction threshold. Thresholds vary, so a small number of $15 to $40 templates may not trigger registration in a state, while growing volume in one state could. If you reach a threshold, you may need to register, collect the correct rate and file returns for that state, even though you are based in London with no US office.

For your UK tax return, the customer's location does not make the income tax-free. If you are UK resident and trading here, overseas sales are still trading income. Record the gross sale, the platform fee separately, any sales tax collected by a marketplace separately, and the sterling amount received, with conversion evidence. Keep customer location evidence, invoices and payout statements. That breakdown prevents double-counting fees as income and makes it easier to spot when a US state threshold is approaching.