Yes I know ..... another 686 thread !

The way it *allegedly* works now is that if the value of the package is over £135 then import duty/VAT is applied at UK customs as it was before (only with the cut off level now raised to £135). If the value is £135 or less then the business selling into the UK has to register for UK VAT and charge you the VAT directly at point of sale, then pay that VAT to the UK treasury. Hence why some EU companies are no longer shipping to the UK, until they get their systems and registration sorted out. (That same system of paying VAT directly to the buyers country is being adopted within the EU in July BTW, so possibly some EU companies will suspend shipping to the UK until then when they have to update everything anyway). There is now no "low value" exemption where VAT is not collected (used to be £15 or £20 or so) on commercial packages, but low value gifts are still VAT free.

As already mentioned if the EU seller is VAT registered then they'll remove the VAT at point of sale (on items values at over £135) making that payment cheaper, but then UK customs will add 20% VAT at this end, so it'll end up around the same or slightly more.

If the EU seller isn't VAT registered or the item is from a private seller and value is over £135 then UK customs will apply VAT at the point of import... it's not clear what happens on an item from a private seller valued below £135. In theory they'd need to register for and charge UK VAT, but the EU has a system for "micro businesses" exporting less than 10K euros worth per year who are exempt from collecting the VAT for the destination country, so presumably (hopefully!) we'll have something similar in the UK and private sellers and very small companies who aren't VAT registered in their own country will be able to send you a package valued at £135 or less without attracting VAT at UK customs.