HMRC, VAT, and Labels: UK Apparel Essentials for 2025

Launching a clothing brand in the United Kingdom can be rewarding, but success depends on getting compliance right from day one. In 2025, the essentials include understanding HMRC obligations, knowing when VAT applies, and meeting labelling and safety standards for textile products. With a clear plan for registration, record keeping, and product information, you can build reliable operations that scale without regulatory surprises.

How to create your own clothing brand: 2025 guide

Start by selecting a business structure that suits your risk and growth plans. Many founders begin as sole traders for simplicity, while others form a limited company for separate legal personality and clearer investor readiness. Register with HMRC for self assessment as a sole trader or corporation tax if you incorporate. If you import or export garments or fabric, obtain a UK EORI number to move goods through customs efficiently.

Understand how VAT fits your model. As of 2025, the UK VAT registration threshold is 90,000 pounds of taxable turnover in a rolling 12 month period. Most adult apparel is standard rated at 20 percent, while most childrens clothing and footwear are zero rated. If you register, you must keep digital VAT records and file via Making Tax Digital compatible software. If you sell through an online marketplace, the marketplace may be responsible for VAT on certain low value imports or when an overseas seller is involved. Always confirm who is the deemed supplier in specific scenarios.

Supply chains matter for quality and compliance. Use written agreements with manufacturers that specify fabric composition, testing responsibilities, and delivery terms. Ask for lab test reports where safety rules apply, such as childrens garments with cords or nightwear flammability. Keep product specifications and batch records organised so you can evidence claims and trace issues.

How to create your own clothing brand: Full guide

Textile labelling is mandatory for most apparel. Fibre composition must be accurate and use approved fibre names, shown in percentages that add up to 100 percent. Indicate the presence of non textile parts of animal origin. Size and care instructions are not legally required, but UK consumers expect them; if you use care symbols, follow the appropriate licensing and standardised meanings. Country of origin is not mandatory for textiles, but any claim must be truthful and not misleading. Use made in UK only when substantial transformation occurs in the UK.

Product safety is a core duty. The General Product Safety Regulations apply to clothing, and there are specific standards to know. For childrens garments, ensure no hazardous cords or drawstrings per the EN 14682 standard. Nightwear and certain fancy dress costumes must meet flammability requirements under the Nightwear Safety Regulations; apply the KEEP AWAY FROM FIRE warning where required. For accessories that might be considered toys, check the applicable safety standards and labelling. Maintain a technical file with test reports, materials data, and supplier assurances.

Operations and fulfilment bring additional rules. Distance sales must provide clear pre contract information and a right to cancel under consumer protection law. Display a geographic address for returns, set fair delivery timelines, and present taxes and fees transparently at checkout. If you place packaging on the UK market above certain thresholds, review the packaging extended producer responsibility scheme, which requires eligible businesses to collect and report data and may involve fees. Build these obligations into your production calendar and budget.

All you need to know about creating your own clothing brand

HMRC compliance extends beyond registration. Keep complete records of sales, purchases, imports, and exports for at least the required retention period. If VAT registered, reconcile output tax and input tax each period and store invoices digitally. Ensure your invoices show legally required details such as VAT number when applicable, date, invoice number, supplier and customer details, and a clear goods description. For zero rated childrens clothing, maintain evidence supporting your VAT treatment, such as size specifications that meet zero rating criteria.

Protect consumers and your reputation with accurate claims. Substantiate any sustainability statements with verifiable evidence, such as certified organic fibres or audited factories, and avoid vague or absolute terms. Present fibre content and care guidance consistently across hangtags, sewn in labels, and product pages. Provide a straightforward returns policy, and handle refunds within the statutory timelines. When selling internationally, remember that destination markets may impose their own labelling and safety requirements, separate from UK rules.

Finally, create a practical compliance timeline. Before launch, complete HMRC registration steps, secure your EORI if needed, and finalise labels and safety testing. In the first trading months, set up bookkeeping, inventory tracking, and a product quality review process. Each quarter, review VAT position, marketplace agreements, and any regulatory updates relevant to apparel, such as changes to packaging reporting or labelling guidance. This cadence helps you maintain control as your range and sales channels expand.

Conclusion

A UK apparel startup that treats HMRC obligations, VAT, and labelling as design constraints rather than afterthoughts is better positioned to grow. Clear product information, diligent record keeping, and timely filings reduce risk and build customer trust, allowing your brand to focus on fit, fabric, and creativity while staying compliant in 2025 and beyond.