Duties and Taxes: Importing Goods Into UK

import duties and taxes

When goods cross international borders, they are subject to customs duties. Customs duties are imposed by local governments’ particular agencies and authorities created by governments in order to preserve businesses, economies, and local industries. Various products, as well as different countries of origin, may be charged by different customs duties associated with them.

Tax and Duties on Importing Goods

Difference between taxes and a duties

The terms 'taxes' and 'duties' can be easily confused when it comes to shipping. So, first, it's important to learn what they generally mean.

Duties: Customs duties are types of taxes on extraterritorial goods collected by customs to generate revenue for the government and to protect the local industry.

Types of duties: Anti-dumping taxes, trade tariffs, export duties, and excise duties are all common examples of duties. These are the most common forms of import duties that apply to goods entering a country.

Who pays duties? These are mostly paid by the importer.

Let's learn about different types of duties one by one.

Import Tariff

A tariff is a type of duty imposed on specific imports. A tariff is a fee charged on specific products entering the country, usually to deter the importation of particular goods (this is generally done with the aim of giving further protection to specific local industries).

The majority of imports are subject to duties. Additional tariffs may be applied on a few products (depending on the country or jurisdiction). Importers can establish whether duties and customs are relevant for shipments by correctly classifying them using classification systems such as HS and HTS. Tariffs are specific tariffs imposed on goods that fall within a specified category of imports.

Anti-dumping duties

Anti-dumping duties are imposed to protect domestic industries from foreign goods or products that may be sold in local markets for lower prices.

Anti-dumping duties are usually applied to offset the costs of "dumping." The cost is determined by calculating the difference between the cost of production or the price in the country of origin and the price the goods are sold for in the importing country.

Taxes: These are charges imposed by the government on purchased goods imported into the country. Even though the goods have been purchased outside of the country, the consumption tax applies and must be collected by customs when products enter the country.

Types of taxes: Although sales tax, value-added tax (VAT), goods and services tax (GST) are all basically the same thing, the names and rates vary per country. Depending on the country and product, tax rates can be as low as 0%, as high as 10%, or as high as 20%.

Who pays the tax? The taxes are mostly paid by the importer.

Value-added Tax (VAT)

It is a type of sales tax levied by the government on all goods and services sold inside a country. It is technically assessed at each level of production, distribution, and end-customer sale.

When importing to a country with VAT, the VAT is part of the total charges that must be paid on the imported goods, and it contributes to the entire landed cost.

What is the customs duty and VAT on imported goods in the UK?

Customs Duty

The charges levied on goods when they are carried across the international boundaries are known as customs duties. It is a tax levied on goods imported and exported.

This duty is used by the government to increase revenue, protect domestic industries, and regulate the movement of products. Customs duty rates differ based on where the goods were created and what they were made of.

VAT
VAT is not applied on goods that are gifts and worth £39 or less. It is applied to all types of goods sent from:

  • EU to Northern Ireland
  • The UK to Great Britain
  • It is paid either when the items are purchased or when they are delivered to you. If you pay VAT to the delivery company, it will be calculated on the total package value, which includes:

  • Value of the goods
  • packaging, postage, and insurance
  • any duty that you owe
  • VAT is levied at the VAT rate that applies to your goods
  • What are duties and taxes based on?

    Several factors influence the amount of customs duties and taxes you must pay for a shipment:

    HS Code: The product type is classified using the HS code. This commodity code is used by customs officials to swiftly determine what is being transported and to apply applicable taxes, tariffs, and regulations.

    Value of the Products: Customs uses the value of the goods, including freight and insurance costs, to calculate duties and taxes and clear your shipment. As a result, it's important to provide the exact amount on the commercial invoice

    Goods Description & Category: The goods description of the commercial invoice, which includes the product's end-use and manufacturing country. The description of goods and the HS code should match to ensure that the goods are accurately categorised.

    International Trade Agreements: The amount of taxes and levies on a shipment might be influenced by international trade agreements between countries. If you're transporting goods between countries that have a trade agreement, you might be able to get them duty-free or at a discounted rate.

    What are some other costs to keep in mind?

    It's important to have proper information about a shipment's total costs when transporting items internationally. Other costs that may be applied to your shipment along the process can include:

    Carrier fees: These are the costs of transporting your goods from point A to point B. Many of the services listed below can be provided by carriers, allowing all duties, taxes, and other costs to be charged in addition to the carrier fees.

    Broker fees: The cost of clearing goods through customs with the help of a customs broker. Brokers frequently pay duties and taxes on behalf of the receiver and then charge the receiver for them along with their commission. Customs brokers are frequently provided by carriers as part of their shipping services.

    Surcharges and ancillary fees: These are the additional carrier expenses for items that are not subject to standard shipping and handling procedures, such as risky goods and temporary imports.

    Insurance: To protect your items in the event that they are lost or damaged while in transit. This is accessible through your carrier or separately.

    How to refund VAT and Duty?

    After you've made your declaration, you may be able to request a refund if:

  • Your products are lost or destroyed, before they reach the UK
  • You make a mistake when you work out your duty
  • To get a refund, you must apply for a refund within:

  • 3 years of making the overpayment of customs duty or VAT on imports
  • You have 12 months to claim the duty you paid on damaged or defective items.
  • 3 years if you do not travel after filing a declaration.
  • If you're a VAT-registered business, you'll need to claim import VAT on your VAT return.

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