Taxes and Duties for Imported Goods in the UK

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Have you ever purchased something and had it shipped to you from overseas? Imported goods allow us access to products that are made in other countries. To bring them in, however, you need to pay certain duties and taxes to UK customs. If you are buying from abroad, here is a breakdown of what fees you should expect to pay to avoid the shock of extra fees. 

VAT

VAT is paid on goods from countries outside of the European Union as well as those from EU special territories, like the Canary Islands If they are:

  • Gifts have a value of more than £39 
  • Other goods with a value of more than £15
  • Alcoholic products, tobacco products, or fragrances

It should be noted that items from the Channel Islands are charged VAT no matter how much they cost. 

The amount of VAT you have to pay depends on the total value of the goods. This means that the price for the item, its postage, packaging, insurance, and the duty required is considered when computing for VAT.

Customs Duty

Customs Duty is paid on gifts and other goods coming from countries outside the EU if they exceed a certain value. Value, under UK law, is defined to include both the price paid for the goods as well as the postage, packaging, and insurance. 

The amount for customs first considers whether the item is a gift or not. Its value is also considered. Generally, items under £135 are not subject to customs duty. For gifts worth £135-£630, the rate of customs duty is 2.5%, with some exceptions. Gifts exceeding £630 and goods that are worth above £135 and not considered gifts have to pay the customs duties depending on what type of goods they are and country of origin. 

Excise Duty

Alcohol and tobacco from outside the EU are charged Excise Duty, regardless of whether they are gifts or not. For alcohol and tobacco coming from EU countries, it is important to check if the Excise Duty is already computed as part of the price to avoid penalty.

The Excise Duty on alcohol and tobacco does not include the 20% VAT rate on these types of products. 

You may have noticed that gifts are mentioned specifically in listing down the taxes and duties required. This is in consideration that gifts are acts of generosity and not for gain. However, aside from the monetary value, other things must be considered to qualify as a gift within the definition of taxes and duties. The goods must be:

  • Declared as gifts in customs
  • For a special occasion such as a birthday or anniversary
  • Must be between individuals and not between businesses.
  • For personal use

It may seem quite complicated to compute for all these extra fees when purchasing items from outside the country. Fortunately, it is standard practice for the courier company such as the Royal Mail or Parcelforce to get in touch with you with instructions on how to deal with customs to receive your items – just make sure to follow the instructions. Items that have not been paid for after about three weeks are sent back. 

Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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