Duties Taxes to UK Customs

Duties Taxes to U.K. Customs


Duties Taxes to U.K. Customs When buying goods from outside the E.U., you have to pay duties and taxes to U.K. Customs to release your products into the country. The vast majority of shipments are subject to U.K. Duty and VAT, and these are the two main costs that you should understand before importing from overseas.  


Duties Taxes to UK Customs

Duties Taxes to U.K. Customs


U.K. Duty

The amount of U.K. Duty required to pay depends on the declared value of the goods and the type of product you’re importing. Each product is given a different duty rating/percentage. To find out the percentage you’ll have to pay for your product, you can either ask us, and we’ll try to find the most appropriate heading for your goods, or you can use the online tariff at U.K. Custom.


VAT on an import

When a shipping quote says “plus U.K. Duty & VAT”, don’t think that the VAT is on the shipping price; it’s VAT on the taxable import. If you buy goods from outside the E.U., you won’t pay VAT to the supplier, but that doesn’t mean you won’t have to pay it at all. The taxable import on which VAT is payable is the amount you pay for your goods, plus the shipping cost, plus the U.K. Duty. So you are effectively paying VAT on everything that it costs for you to buy the goods and get them into circulation in the U.K.


Duty and VAT Estimator

We’ve simplified the calculations, so it’s easy for you to estimate the U.K. Duty & VAT you’ll have to pay and give you an example to work. In reality, HMRC use a figure called a “VAT Value Adjust” and don’t work from the full shipping quote (which also affects the U.K. Duty), but for a good estimate, you can follow this example or use our calculator:

If you pay your supplier USD 3000 (let’s call it £2000) for your goods, the U.K. Duty rating for these particular goods is 3.5%, and the shipping quote is £300 then:

UK Duty = 3.5 % of £2000 = £70.00

VAT = 20 % of (UK Duty [£70] + Shipping [£300] + Cost of the goods [£2000]) = £474.00

Therefore the total duties and taxes payable to import these goods would be £544.00 (£70 for U.K. Duty and £474 for VAT) in addition to the £300 shipping cost.

  • How to Pay Duty and VAT If you’re uncertain about how to pay the Duty and VAT you owe to HMRC for your import, don’t be – it’s easy. However you import your goods, the company that does the customs clearance will most likely contact you to confirm how much you owe and how to pay it. For example, when importing with Shippo, we’ll declare your goods to customs and pay the U.K. Duty and VAT on your behalf to have your consignment released. At this point, we’ll have the exact U.K. Duty and VAT figures and will forward them to your freight invoice. You’ll then pay the Duty and Import VAT along with the shipping via bank transfer in one fell swoop before delivery! This facility is included in the service (most companies charge an extra fee). It’s not dissimilar when importing samples or smaller consignments via the postal service or a courier company. As you will probably have paid the shipping cost up front, you’ll have the Duty and VAT to pay. The company, be it Royal Mail, Parcelforce etc., will contact you to pay the Import Duty and VAT for your shipment. They’ll typically wait for about three weeks for you to pay the costs, after which they can return the goods to the sender.
  • Duty and VAT on sample products: There is no definitive answer as it depends on a few factors. Usually, there would be duty costs when importing goods from China, India, Taiwan, and the USA, but there are some cases where Duty and VAT relief is granted. Duty and VAT relief can be given on a sample of a product if:
    • Once imported, they can only be used as sample products.
    • Are of negligible value (less than £15 for businesses or £34 for gifts)
    • They are intended to gain orders for the commercial product they represent (i.e. are not fully functional). Customs may change their exact figures. Still, at the time of writing, goods with retail value (goods value + shipping cost + duty + insurance) of more than £15 are liable to VAT. There is a higher threshold for U.K. Duty, and goods with a commercial value of more than £135dutyless the duty come to less than £7) are also liable to U.K. Duty. The exact figures can be found here on HMRC’s site.
    • It is not as simple telling customs that the goods are a sample. Customs set out requirements of those importing ‘sample products’ and may seize the goods if they are not met. The conditions when importing a product from overseas for sample purposes are to do one or more of the following:
      • have your supplier tear, perforate, slash or deface the product
      • Ensure the product is permanently marked; products that are excluded from duty relief include:
      • Products that can be used as anything other than samples
    • “Import VAT” in Demystifying Detail VAT on an import from outside the E.U. is not only charged on the Cost to buy the goods. You’ll pay VAT on all the costs to purchase and get them to you in the U.K. When you’re buying products from outside the E.U., your supplier won’t ask you to pay VAT on the products. Before you jump up and down with excitement, this isn’t the loophole you’ve been waiting for to get one over on HMRC! If you have to pay VAT when buying the same products in the U.K., you’ll have to pay it on the import too, but it’s a bit more complicated than that. HMRC try to make VAT a fair playing field for all. If you buy a taxable product from the shop at the end of your street, you must pay VAT on the retail price. However, this price includes all the costs to get that product onto the shelf. As a result, import VAT is not as simple as paying VAT on your overseas supplier’s price. Ahh, my brain hurts. Please give me an overview! When importing products from outside the E.U., here’s how you should estimate the VAT that you’ll have to pay once the goods are cleared through U.K. Customs: VAT on Taxable Import = 20 % of ([Cost to buy your goods] + [U.K. Duty] + [Shipping Cost & Insurance]) Here’s an example for you to establish the approximate figure. If goods are bought from China for £5000, they are subject to £250 UK Duty. The shipping quote to your door is £500 then the VAT due would be approximately £1150: VAT = 20 % of (£5000 + £250 + £500) = £1150 The detailed explanation, In reality, the principle above is correct, but the way it’s worked out is slightly different. This is because any two companies importing identical products purchased for the same amount should pay the same Duty and VAT figures. It wouldn’t be fair if one company was in the Scottish Highlands and another was next door to the port in Felixstowe or Southampton. The company next to the port of arrival may pay £200 less for shipment delivery than the company in the Highlands. 
    • That would mean a £40 difference in the VAT that they paid…  HMRC have thought of this already! Rather than the whole door to the door shipping cost for the VAT calculation, HMRC uses VAT Value Adjustment. When calculating the VAT that has to be paid, the shipping cost to get the goods to the E.U. border is taken (only part of the shipping quote). This is then added to a VAT Value Adjust figure that depends on the size of the shipment. It’s supposedly an average of the U.K.
    • Charges to clear and deliver the goods into E.U. circulation. Less than container load (L.C. L) shipments have a minimum of £170 for the VAT Value Adjustment figure. Full container load (FCL) shipments have a £550 VAT Value Adjustment figure, and Airfreight shipments have a £100 minimum figure. And relax, that’s the tricky bit out the way! When importing from within the E.U., VAT travelling within the E.U. is not liable for VAT in the same way as it’s a single market. HMRC have more information about VAT within the E.U., but the only VAT that a shipping company will charge when importing products from within the E.U. is VAT on the carriage itself. What about me? I’m VAT registered? If you’re VAT registered, you still have to pay the VAT as detailed above, but you can claim back any VAT that you pay when importing goods (for your business) to the U.K. 
    • You can do this through your average VAT return under standard rules. HMRC will generally send you a certificate (form C79) as evidence that you’ve paid import VAT. C79 certificates are issued monthly. You can find more information about the VAT payable on imports here. HMRC view the ‘E.U.’ as the VAT (fiscal) territory of the E.U., which is different from the Customs territory of the E.U. The countries and territories, which make up the E.U.’s VAT (fiscal) territory, are listed here.
    • When importing goods to the U.K. from China, India, the USA or anywhere else outside of the E.U., you will need a tariff code to declare the products to U.K. customs. Customs tariff classification codes (sometimes referred to as H.S. codes, commodity codes or TARIC codes) define and allocate a duty rating to each imported product.  
    • The link to HMRC’s GSP page.
    • Source: shippo