Import tax is a topic that often discussed among businesses and consumers alike. Duty and VAT is an important aspect of international trade and e-commerce to the UK. Customs duty, is levied on goods imported into the country from outside the European Union. And, although Canada and the UK share a free trade agreement, this includes most Canadian shipments.
Import tariffs vary depending on the classification of goods, their value and country of origin. Import duty plays a crucial role in the competitiveness of Canadian goods exported to the UK. Understanding the intricacies of UK import tax is essential for businesses and individuals involved in international trade, as it can have far-reaching consequences on pricing, profitability, and market access. Keeping abreast of the latest developments and regulations in this area is key to navigating the complexities of the UK import tax system.
Note: Information in this post and all Jet Worldwide online content is for general information only.
The UK follows the same basic formula of the world's largest economies for duty calculation. Duty is also referred to as import tariffs. We use terms interchangeably in this post.
There are three major categories of import fees to consider when importing to the UK. The total import fees include duty, VAT, and carrier broker import fees.
Are goods shipped from Canada Imported Duty Free to the UK?
All imports from Canada to the UK are subject to import duty and taxes. Goods that qualify as Canadian origin under the UK Canada free trade agreement can benefit from duty free import.
Do I have to pay VAT on goods imported duty free to the UK
All imports to the UK are subject to VAT. This includes low value and goods otherwise imported duty free.
Can I Ship goods to UK with no charges to my customers in the UK
Goods to the UK can be shipped delivery duty paid via courier. For e-commerce orders, sellers can build dedicated clearance processes to lower the cost of delivery duty and VAT prepaid.
The rate of duty to the UK is based on its HS classification and country of origin. The rate is usually expressed as a percentage of the value.
All goods imported to the UK are subject to UK's Value added tax (20%). Even if goods are imported duty free, VAT still applies.
Importing business may be able to claim back VAT paid for imported goods.
Courier and Postal imports are subject to a "disbursement fee" with a minimum charge of around £15-£20. Freight shipments are subject to brokerage fees that can average more than £200.
Import Duty to the UK explained
Import duty to the UK is determined by three main factors:
HS Classification to the UK
The HS system is used globally with unique aspects to each country. Here is a link to the UK product classification system.
Country of Origin shipping Canada to the UK
Items shipped from most countries, including Canada, are assigned "most favoured nation or MFN" status. But otherwise, no special status is granted based on from where the goods are shipped. Goods that qualify as Canadian origin may qualify for preferential duty free status. The rules of origin are defined under the UK Canada free trade provisions.
Understanding the difference: Shipped from Canada vs Canadian Origin
Declared Value to the UK
The HS code determines the rate of duty usually expresses as a percentage of the value. The correct declared value is usually the "transaction value." The transaction value is simply what the goods were sold for including transport and insurance.
Value Added Tax to the UK - VAT
The value-added tax (VAT) is a consumption tax that also applies to goods imported to UK. The tax is typically based on the value of goods plus duty. For example, using the UK default VAT rate of 20% : Imported goods valued at $1000, plus 10% duty:
- Value for VAT: $1,100
- Amount VAT payable: 20% x $1,100
Payment of VAT must be paid to HM Customs prior to goods being released by customs.
VAT Reclaim for Businesses: In some cases, the importing businesses may be eligible to reclaim the VAT.
Carrier and Broker Import Fees to the UK
The cost to prepare a customs entry depends on the mode of transport, value and nature of the goods. For post and couriers (such as FedEx, UPS and DHL), the import fee is usually referred to as a disbursement fee. The fee is usually expressed as a percentage of total import fees with a minimum charge of around £15-£20. Goods imported via ocean or airfreight incur a customs entry preparation and other fees that average around £200.
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