Importing into the UK UK and EU Import Taxes
 

 

Help! Why did I have to pay so much import duty?

AS more and more people learn how to build a successful Import Export Business by trading profitably on international internet auction sites like eBay, there is a constant flow of new enthusiasts who are becoming importers for the first time. Auction site discussion forums regularly feature complaints from novice buyers about the unexpected import taxes they are expected to pay on the doorstep when that eagerly awaited parcel from abroad actually arrives. Many such people importing goods for the first time are surprised (and often shocked) at the amount of tax which they can be required to pay. Some buyers even try to claim these unexpected import charges back from the unfortunate seller, who could be on the other side of the world....

To help avoid these unpleasant surprises, below is an outline of how the UK (United Kingdom) and EU (European Union) import taxes are calculated. Notice that UK and EU import tax rates are now harmonised into one combined tariff - the TARIC. The UK import regulations outlined below are equally valid for all member states of the European Union.

Importing From European Union States

In order to know whether import tax is likely to be charged, you need to know which countries are currently members of the European Union, because imports from EU states into the UK are not charged import duty.


National Currencies and the Euro

Some of the EU member States have merged their individual currencies into a Single European currency - the Euro. However, the Euro is not yet a common European currency, as is sometimes assumed outside Europe. Membership of the European Union does not also mean automatic immediate membership of the common Euro currency.

EU members Denmark, Sweden and the UK have not adopted the Euro currency, and retain their own national currencies. Switzerland and Norway also retain their national currencies, because they are not members of the EU. Some fear sleepwalking into a European Superstate, and a loss of political and economic independence, particularly the ability to vary interest rates according to the current prevailing local economic conditions.


International Trade
How countries agree common trade practices with each other

In order for international trade to operate as smoothly as possible, it is necessary for countries to agree a common set of trade standards and practices between them. A previous more loose arrangement called the General Agreement on Tariffs and Trade (GATT) has grown into the World Trade Organisation (WTO). International trade practices are in the first instance agreed between countries via the WTO, which is the only international organisation overseeing the rules of international trade. There are at present around 147 member countries. The WTO administers and polices free trade agreements, arbitrates in trade disputes between governments, and organises trade negotiations. Whereas GATT only regulated trade in merchandise goods, the WTO also covers trade in services, such as telecommunications and banking.. more...

Trade Disputes

In the volatile world of international commerce political tensions often give rise to trade disputes. It is possible that increased import duties and/ or sanctions may be in force between certain countries which may affect you as you read this. Check current trade disputes reports or with HM Revenue & Customs if substantial sums of money could be involved.

Import Duty and Excise Duty

All goods, new or used, imported into the EU from outside the EU are subject to Customs Duty (Import Duty or Import Tax) and VAT (Value Added Tax) according to their value and import tax classification. All goods imported into the UK from outside the EU must be declared to HM Customs & Excise and in most cases this includes goods bought over the Internet.
» HMRC Customs Procedures

 


"Import - Export"
...How to Get Started in International Trade!
by Carl A. Nelson

"....a beginner's guide to starting an import export business. It covers the basics, including choosing a product, making contacts, market research, market planning and pricing. It explains the intricacies of taxes, customs and tariffs and a new chapter examines e-commerce, outlining the ins and outs of importing and exporting online. Tips and success stories appear throughout the text..... Covers trading procedures for EU countries.. more..."
UK  |  US
 

 
Imports by Mail, Freight and Cargo
(Personal travel imports - see below)

Import Duty rates are set annually by the EU, and run from 1st January to 31st December. They are published by each EU country in a "Customs Tariff". The UK version is published in three large loose leaf binders, allowing for constant updates to be inserted or substituted.

The Customs Tariff groups all goods into various classifications in order to arrive at a rate of Duty. The broad classifications are divided into 21 sections, which are divided into 97 chapters. There are approximately 14,000 sub-classifications. Each classification is identified by a ten digit code number.. more...

Import Duty is usually percentage based. It averages at between about 5% and 9% - but with extremes in some cases between nil and 85%.

IF the consigment is liable to Customs Duty (see the "Tax Free Allowances" section below) Customs assess the total amount of Customs Duty to be paid based on the value of the goods, PLUS the transport and insurance costs to the country of destination. Other costs may be included such as tools, dies, moulds, design work, royalties, licence fees.. more... Note that VAT (Value Added Tax) is then added.


Example of Import Duty and VAT calculation
The £ sign indicates UK Pounds
(sometimes written as GBP - Great Britain Pounds)



  £     £
        Tax
Value of goods say: 100.00  
Shipping and insurance costs to the UK, say:  15.00  
Total value for Import Duty: 115.00  
Import Duty payable at say 5% on £115.00:   5.75 5.75
Base value for Value Added Tax (VAT): 120.75  
VAT on £120.75 @ 17.5%:   21.13 21.13
  141.88 26.88

Therefore in this example the total Import Duty and VAT charges payable on importation of these goods would be £26.88 - or a tax rate of 26.88% on the original £100.00 price of the goods.

From this it can be seen that in most cases Value Added Tax will be the largest tax to pay on importation.

VAT: The rate of VAT is not the same in all member states of the EU. It is at present allowed to vary quite widely across the member states of the EU. Rates currently vary from about 15% to about 25%. At the time of writing, the UK rate is 17.5%.

» EU VAT Rates

Import Duty: The rate of Import Duty will vary according to the type of goods imported and/or the country of origin.

Customs Clearance Fees

Your courier, carrier, freight forwarder or import agent (including Royal Mail or Parcel Force) will also charge you fees to clear your products through customs. At the time of writing Royal Mail charges £4.00 and ParcelForce rates start at £8.00 per item, with a charge of £13.50 for high value items worth over 1,000 Euros.. more... There can be aditional charges for storage if items are held up in customs, late payment etc. Other commercial courier firms and freight forwarders tend to charge higher rates, and the bill may arrive some time after the parcel has been delivered to you - be prepared to be shocked. Parcel Force offers a Track & Trace service. See also more information at Postwatch.


The person receiving the shipment is legally obliged to pay Import Duty and VAT. Private individuals intending to buy goods on the internet from non EU countries should be particularly careful. The price advertised on the seller`s website will not include UK Duty and VAT but YOU AS THE IMPORTER WILL BE EXPECTED TO PAY THIS WHEN THE SHIPMENT ARRIVES IN THE UK.

You should be aware that although the foreign sender may have completed the Customs declaration form on the parcel, you are regarded in law as: (a) the importer of the goods; (b) responsible for the information on the Customs declaration, and (c) responsible for any Customs charges that may be due. This means that if you purchase goods from non EU suppliers, and the Customs declaration is found to be false or misleading, for example falsely declared as a gift, you may be liable for financial penalties or criminal prosecution. Furthermore the goods themselves will be liable to forfeiture. It is therefore in your own interests to ensure Customs declarations are completed properly...
»  Shopping on the Internet - HM Revenue & Customs

Excise Duty is payable on certain goods such as wines, spirits, cigars, cigarettes and tobacco, and is in addition to Customs Duty. Any goods arriving in the UK on which Excise Duty has not been paid will be liable to seizure by Customs. If you receive alcohol or tobacco products by post on a commercial basis, this is known as distance selling, and there is liability to both UK Excise Duty and VAT. The sender should have made prior arrangements to account for these charges no later than the date of despatch. It is in your own interests to ensure these arrangements have been carried out, or your goods may be liable to forfeiture - see "Registered Excise Dealers & Shippers".. more...

If you are VAT registered you may be able to recover the VAT. But Duty and administration costs are not recoverable.


Tax Free Allowances

Current concessions and exemptions from Duty and VAT

  • GOODS of £18 (22 Euro / ~$US 32**) or less in value (before postage, packing and other miscellaneous costs - i.e. the basic intrinsic value of the goods). This allowance excludes alcohol, tobacco products, perfume or toilet waters (see below). If the value exceeds the allowance figure, tax has to be paid on the whole value - not on only the excess over the allowance figure.
     
  • GIFTS from one private individual to another with a value of £36 (45 Euro / ~$US 65**) or less (before postage, packing and other miscellaneous costs - i.e. the basic intrinsic value of the goods). To qualify as a gift the item must be sent from a person, not a business, and must be for your own use. If the value exceeds the allowance figure, tax has to be paid on the whole value - not on only the excess over the allowance figure. If a consignment consists of items that can be separately valued, then as many items as add up to a value not exceeding the allowance figure will be granted relief - but the value of an individual item cannot be divided.. more...   Postage is excluded from the calculation for duty on private gifts sent by mail.. more... There is a more restricted gift allowance on alcohol, tobacco products, perfume or toilet waters (see below).
  •  Note there is a higher £145 allowance for personal travellers entering the UK. (see under Personal Travellers below).

  • Customs duty is waived if the amount is less than £7.00.. more..
     
  • Personal effects of people returning to the UK after residing outside the EU:
     » Transfer of Residence (Hmrc Notice #3.5.1)
     
  • Goods found to be defective or damaged or otherwise not as ordered. Customs must be notified before qualifying goods are re-exported, otherwise duty relief may be lost:
    »  Rejected Imports (Hmrc Notice #266)
    »  Outward Processing Relief (Hmrc Notice #235)
     
  • Goods imported for processing or repair before re-export:
    »  Inward Processing Relief (Hmrc Notice #221.pdf)
     
  • Antiques - importing antiques free of Customs Duty and Excise Duty, or eligible for Value Added Tax (VAT) on a reduced value:
    »  Importing Antiques (Hmrc Notice #362)
    »  British Antiques Dealers Association (Importing Antiques)
     
  • Re-importing goods in the same state they were in on previous export, and obtaining total or partial relief from customs charges:
    »  Importing Returned Goods  (Hmrc Notice #236.pdf)
     
  • Customs Reliefs - Overview:
    »  EU Arrangements for Customs Relief
 

A Guide For International Post Users (Hmrc Notice #143)

 

Foreign Currency Exchange Rates

The above value allowances are set by the European Union in Euros. As the UK does not use the Euro currency, the above £ allowances are the working equivalents of the Euro amounts.

** @ £1 = $US 1.80   This $US rate quoted above is a guide figure, and is not necessarily the current rate. Foreign currency market exchange rates are constantly changing, sometimes quite substantially. Check the current live foreign currency exchange rates on Bloomberg. The foreign currency exchange rates used by HM Customs are set monthly, and may vary slightly from the current rates. A rate is changed more frequently if it varies by more than 5% from the last published monthly rate. Check the current HM Revenue and Customs FX Rates.

Alcohol, tobacco products, perfume and toilet waters

Alcohol, tobacco products, perfume and toilet waters imported via post, courier etc. (i.e. not accompanying a personal traveller - see below) only qualify for customs relief if they are GIFTS - AND are within the following allowances:

  • Tobacco products: 50 cigarettes OR 25 cigarillos (cigars with a maximum individual weight of 3 gms) OR 10 cigars OR 50 gms of tobacco OR a proportional assortment of the different tobacco products.
    » Buying Tobacco over the Internet
     
  • Alcohol: 1 litre of distilled beverages and spirits over 22% volume; 1 litre of fortified OR sparkling wine, and some liqueurs of 22% volume or less; OR a proportional assortment of the different products; and 2 litres of still wines.
    » Alcohol and Tobacco Gifts (Hmrc Notice #143.2.5)

  • Perfume and toilet waters: 50 gms of perfume; 0.25 litres of toilet water.
    » Perfume & Toilet Waters Gifts (Hmrc Notice#143.2.6)
 

Preferences and Reduced Rates

Preference and tariff quota arrangements: certain goods which originate in a ‘preference’ country may be imported into the European Union at a nil or reduced rate of customs duty. The exporter must provide you with evidence in the form of an approved preference certificate issued by a recognised competent authority to present to Customs proving the origin of the goods. There may be a limit on the total quantity of goods which can be admitted at a preferential rate in a specified period. You may also benefit from a nil or reduced rate of duty on certain goods imported from non EU countries if there is a temporary suspension of Customs duty.
» The General System of Preferences (GSP)

 

Personal Travellers
Imports Brought into the UK by Personal Travellers

Restricted and Prohibited Goods

Visitors to the UK should note that many items are subject to import and/or export control or complete ban, including the following: controlled drugs* (heroin, cocaine, etc.); counterfeits and fakes; weapons; firearms; indecent material; live animals (except importing cats and dogs which meet the conditions of the Pet Passport Scheme); items which could be a threat to health and the environment, i.e. certain plants, meat, meat products and products of animal origin e.g. hides, skin, poultry, eggs, milk and dairy products.

 The UK has severe penalties for drug smuggling. Drug traffickers may try to trick travellers into helping them import illegal drugs. If you are travelling to the United Kingdom, never carry luggage or parcels in or out of customs control points for someone else.. more...

» Restricted and prohibited goods - HMRC
 


Alcohol and Tobacco Products

Travelling to the UK from EU Countries
(See below for Channel Islands, Canary Islands, Gibraltar, Cyprus)

Since the introduction of the European Single Market in 1993 and the associated relaxation of border controls, goods for personal use on which tax or duty has been paid in an EU country do not attract further UK tax or duty on importation into the UK.

However although duty is paid on the goods in the EU country where they are bought, it is usually at much lower rates than in the UK. Travellers have been allowed to bring substantial quantities of attractively priced alcohol and tobacco into the UK from other EU states... but if these alcohol and tobacco goods are brought into the UK, they must be for the personal use of the traveller who is bringing them into the country.

There are in fact no limits on the amount of duty paid alcohol and tobacco products which travellers from other EU countries can import into the UK for their own use - including goods intended as gifts. This is a fundamental freedom of the Single Market. However travellers cannot bring back goods for commercial purposes without following the appropriate commercial procedures.

Registered Excise Dealers & Shippers (Hmrc Notice #203.pdf)

Consequently any alcohol or tobacco you bring in must be for your own use and transported by you. "Own use" includes goods for your own consumption and gifts. If you bring in goods for resale, or for any payment, even payment in kind, they are regarded as being for a commercial purpose. If you bring back large quantities, Customs officers may ask you about the purposes for which you hold the goods. You are particularly likely to be asked questions if you have with you more than the following guideline amounts:

  • Tobacco: 3200 cigarettes, 200 cigars, 400 cigarillos, 3 kg of smoking tobacco.
  • Spirits (Brandy, Whisky etc): 10 litres.
  • Wine: 90 litres.
  • Fortified Wine (Sherry, Port etc): 20 litres.
  • Beer: 110 litres
     
At the time of writing, there are stricter limits from some newer EU states. From the following EU states there are limits on the amounts of tobacco products you can bring back into the UK without paying UK duty:
  • Czech Republic: 200 cigarettes OR 250 grams of smoking tobacco OR 50 cigars OR 100 cigarillos
  • Estonia: 200 cigarettes OR 250 grams of smoking tobacco (no limit on other tobacco products as long as they are for your own use).
  • Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia: 200 cigarettes (no limit on other tobacco products as long as they are for your own use).

You cannot bring back tobacco and alcohol goods for payment or resale - and you may be breaking the law if you sell the goods that you have bought. The goods will be taken from you, and for serious offences you could get up to up to seven years imprisonment.

  Valuing goods wrongfully destroyed by Customs 



Alcohol and Tobacco Taxes: the UK v. the EU

"Floating off-licence" detained:  A "floating off-licence", anchored 13 miles off the North East coast of the UK, has had its cargo detained by Customs and Excise officials. The 72ft-long yacht was moored in international waters off the coast of Hartlepool, and was selling cut price alcohol and cigarettes.. more... (BBC News)

"Booze cruise" legal threat to UK. Stocking up on alcohol in France is a popular British custom. The EU has accused British Customs of disproportionate tactics in tackling people bringing excessive amounts of alcohol and tobacco into the UK.. more... (BBC News)


Travelling to the UK from Countries outside the EU

There are stricter limits when returning to the UK from outside the EU. "From outside the EU" here means also from Gibraltar, and (for VAT and Excise Duty) the Canary Islands and the Channel Islands - see the EU Special Member Territories above. (See also Cyprus* below). In this case you can only bring in, for your own use only, the following lower amounts into the UK without paying UK tax or duty:

  • Tobacco: 200 cigarettes OR 100 cigarillos OR 50 cigars OR 250g of tobacco.
  • Spirits: 1 litre of spirits or strong liqueurs over 22% alcohol by volume
    OR
    2 litres of fortified wine (such as Port or Sherry), sparkling wine, or other liqueurs.
  • 2 litres of still table wine.
  • Perfume: 60 cc. Eau de Toilette: 250 cc.
  • Other Goods: £145 - including gifts and souvenirs (e.g. cameras etc.). If the value exceeds the allowance figure, tax has to be paid on the whole value - not on only the excess over the allowance figure. Note this higher personal travel allowance compared with the lower allowances listed above for mail order and freight imports.
    UK Chancellor of the Exchequer says EU should raise the out of date £145 travellers` allowance.. more...

You are entitled to these allowances only if you travel with the goods and do not sell them. If you are under 17 years of age, you are not entitled to the alcohol and tobacco allowances.

*Cyprus: At the time of writing, due to the complicated political situation on the island, goods imported from Turkish controlled areas of Cyprus are treated as imports from outside the EU, but.. "the forbidden fruit of Northern Cyprus is set to appear on European supermarket shelves as the EU prepares to bring the territory in from the cold.." more...

» Travelling To The UK From Outside The EU

» Customs Guide for Travellers Entering the UK
                    (Hmrc Notice #1 .pdf) 

 

What rate of duty will I have to pay?

You can check the rate of import duty on your product by consulting the EU Taric (Integrated Tariff of the European Communities) internet database.

»  The Taric

 

 Remember that Customs rules and duty free allowance amounts are subject to change. You can check for the latest regulations with:

HM Revenue & Customs National Advice Service
Tel: 0845 010 9000 8am to 8pm Monday to Friday
From outside the UK - Tel: +44 208 929 0152
Email: enquiries.lon@hmce.gsi.gov.uk


 

Brief Guide to Import Procedures - HMRC Notice #501

Import and Export - HM Revenue & Customs - FAQ

Export Procedures - HMRC Notice #275

HM Revenue & Customs - Home Page

HMRC uktradeinfo.com

World Customs Organisation

EuBusiness.com - Customs Guide

World Trade Organisation(WTO)

European Commission External Trade Directorate

Import Export - Breaking Down the Barriers - Hmrc



USA - Importing into the USA - Customs Regulations
(US Customs & Border Protection - www.cbp.gov)


  
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Disclaimer: This content is posted here "as is", without warranty of any kind, as a general guide only, and as a pointer to authoritative source information. No liability is accepted for any indirect, incidental, consequential, special, or exemplary losses, including but not limited to lost profits, in any way arising out of or relating to this content. This content should not be relied upon as a substitute for taking appropriate professional advice.

 

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