{"id":9543,"date":"2020-02-27T20:54:26","date_gmt":"2020-02-27T12:54:26","guid":{"rendered":"https:\/\/www.zhenhub.com\/?p=9543"},"modified":"2022-10-07T18:24:37","modified_gmt":"2022-10-07T10:24:37","slug":"calculate_taxes_importing_uk","status":"publish","type":"post","link":"https:\/\/zhenhub.com\/blog\/calculate_taxes_importing_uk\/","title":{"rendered":"How to Calculate Taxes for Importing in UK | Updated 2020"},"content":{"rendered":"<p><em>Reading time:\u00a0 3 min 11s\u00a0<\/em><\/p>\n<h3>How to Calculate Taxes and Duties for Importing Into UK<\/h3>\n<p>&nbsp;<\/p>\n<p>E-commerce businesses and other individuals shipping goods into the UK should be clear about their taxes and duties liabilities. Although the thought of this tends to drive a lot of people crazy, calculating the taxes and duties due on your shipments should not be much of a challenge when you understand how things work.<\/p>\n<p>We\u2019ll go down into the basics of this in this guide. But before then, let\u2019s first have a brief look at <u><a href=\"https:\/\/stats.oecd.org\/glossary\/detail.asp?ID=2658\" target=\"_blank\" rel=\"noopener\">what taxes and duties are<\/a><\/u>, in the first place.<\/p>\n<p>&nbsp;<\/p>\n<h3>UK Import Duty &amp; Tax<\/h3>\n<p>Goods purchased and imported into the UK from outside the EU are subjected to tax and duty payable to the UK Customs Department. Movement of products within the EU are exempted from VAT, although VAT will still be levied on the shipping and carriage costs.<\/p>\n<p>If your goods are liable to VAT and duty charges, they\u2019ll only be released to you upon payment of the due fees. So, while you\u2019re calculating what it will cost to ship your goods from China, you need to factor in both the duty and VAT.<\/p>\n<ul>\n<li>\n<h4><em>Understanding the VAT<\/em><\/h4>\n<\/li>\n<\/ul>\n<p>You may need to pay VAT on the cost of the goods as well as the amount it costs to ship to the UK. So, the VAT is not just calculated on the goods alone, it will, however, be on the total of what it cost you to bring the goods into the UK<\/p>\n<ul>\n<li>\n<h4><em>UK Import Duty<\/em><\/h4>\n<\/li>\n<\/ul>\n<p>Different products have different duty percentages.<\/p>\n<p>This means that you may have to pay slightly different import duties on various products. The UK government has an online tariff calculator on its <u><a href=\"https:\/\/www.gov.uk\/trade-tariff\" target=\"_blank\" rel=\"noopener\">website<\/a><\/u>. Either you use this to calculate your import duty, or you ask your freight agent to help with it.<\/p>\n<p>How much you pay as import duty will depend on the class of goods you\u2019re shipping.<\/p>\n<p>This is where the HS Codes come into play. Along with a detailed description of your shipment, the goods must also be allocated to the right tariff heading, as errors may attract costly fines and penalties.<\/p>\n<ul>\n<li>\n<h4><em>HS Codes<\/em><\/h4>\n<\/li>\n<\/ul>\n<p><u><a href=\"https:\/\/data.gov.uk\/dataset\/8c68d3d1-e506-4f50-835d-949c974aa4ad\/uk-tariff-codes\" target=\"_blank\" rel=\"noopener\">HS Codes<\/a><\/u>, also known as the Customs Harmonized Tariff System Codes, are used in determining what percentage of the cost of the goods will be due as import duty. This must be error-free and noted correctly. The code classification will help you understand the tariff class your products belong to. This will be helpful in calculating your VAT and import duty accurately.<\/p>\n<p>&nbsp;<\/p>\n<h3>How to calculate VAT and Duty<\/h3>\n<p>There are two main methods to calculate duty and VAT.<\/p>\n<p>You can use the CIF or the FOB, depending on how your package is being shipped into the UK. Below, we\u2019ve laid out two examples to help you understand how to calculate your duty and VAT using either method.<\/p>\n<p>&nbsp;<\/p>\n<h3><em>CIF &#8211; Cost, Insurance, and Freight<\/em><\/h3>\n<p>The CIF considers the cost of both shipping and insurance and is the most prevalent quote. However, it\u2019s still the method with the higher value when both are compared.<\/p>\n<p>Let\u2019s consider the following scenario for instance;<\/p>\n<ul>\n<li>Value of goods: \u00a37,500<\/li>\n<li>Cost of shipping and insurance: \u00a3,600<\/li>\n<li>Subtotal costs (1): \u00a38,100<\/li>\n<\/ul>\n<p>The duty will be calculated on the subtotal costs (1).<\/p>\n<p>So, let\u2019s assume a duty of 3.5% is levied on the goods;<\/p>\n<p>Then, 3.5% of \u00a38,100 equals \u00a3283.5<\/p>\n<p>Therefore, Duty + Subtotal (1) equals subtotal (2)<\/p>\n<ul>\n<li>Subtotal (2) equals \u00a38,383.5<\/li>\n<li>The VAT will be charged on subtotal 2<\/li>\n<li>Assume there will be a VAT of 20%<\/li>\n<li>20% of \u00a38,383.5 equals \u00a31,676.7<\/li>\n<\/ul>\n<p>Total landing cost including duty and VAT equals \u00a39,960.2<\/p>\n<p>&nbsp;<\/p>\n<h3><em>FOB &#8211; Freight on Board<\/em><\/h3>\n<p>The FOB quote is the second method used in calculating duty and taxes, and it does not consider freight costs and insurance. Let\u2019s assume the scenario below to understand this;<\/p>\n<ul>\n<li>Value of goods: \u00a37,500<\/li>\n<li>Cost of shipping and insurance: \u00a3,600<\/li>\n<li>Subtotal costs (1): \u00a37,500 (does not factor in shipping and insurance)<\/li>\n<\/ul>\n<p>The duty will be calculated on the subtotal costs (1).<\/p>\n<p>So, let\u2019s assume a duty of 3.5% is levied on the goods;<\/p>\n<p>Then, 3.5% of \u00a37,500 equals \u00a3262.5<\/p>\n<p>Therefore, Duty + Subtotal (1) equals subtotal (2)<\/p>\n<ul>\n<li>Subtotal (2) equals \u00a37,762.5<\/li>\n<li>The VAT will be charged on subtotal 2<\/li>\n<li>Assuming there will be a VAT of 20%<\/li>\n<li>20% of \u00a37,762.5 equals \u00a31,552.5<\/li>\n<\/ul>\n<p>Total landing cost including duty and VAT equals \u00a39,815<\/p>\n<p>&nbsp;<\/p>\n<h3>Paying your VAT and Import Duty<\/h3>\n<p>The freight clearance company handling your shipment will usually notify you of your tax and duty liabilities. The process is not that complex. You may get an invoice, so all you\u2019ll need to do is pay, and everything is done.<\/p>\n<p>It\u2019s however, essential to have a clearance agent in place so they can work with the UK Customs on <u><a href=\"https:\/\/www.ukimports.org\/services\/import\/customs-clearance\/uk-customs-basic-import-advice.php\" target=\"_blank\" rel=\"noopener\">clearing your shipment <\/a><\/u>as soon as it arrives. You can also get copies of the invoice from your overseas supplier to notify your clearance agent beforehand.<\/p>\n<p>There are a few things you have to keep in mind, however;<\/p>\n<ul>\n<li>Although you\u2019ll have to pay your VAT if you\u2019re registered for it, you can still claim it back with the Certificate C79 obtainable every month from the HMRC<\/li>\n<li>Sample products of negligible may enjoy duty and VAT relief<\/li>\n<li>Products with a commercial value above \u00a315 will be subject to VAT<\/li>\n<li>Products with a commercial value above \u00a3135 will be liable for duty<\/li>\n<li>Products from certain countries under the Generalised System of Preferences (GSP), may pay lower or no duty at all.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>Bottom Line<\/h3>\n<p>It\u2019s always better to be sure of where you stand as far as VAT and duty payments are concerned. Using the correct HS Codes will help you understand what you\u2019re to pay.<\/p>\n<p>If there is anything you don\u2019t seem to understand, you can find answers from your freight clearance agent or visit the <u><a href=\"https:\/\/www.gov.uk\/government\/organisations\/hm-revenue-customs\" target=\"_blank\" rel=\"noopener\">HMRC website<\/a><\/u>.<\/p>\n<p>&nbsp;<\/p>\n<h4>Want to give your e-commerce a competitive boost? <u><a href=\"http:\/\/contact\" target=\"_blank\">ZhenHub<\/a><\/u> can help.<\/h4>\n<p>We offer inventory management services and software solutions to help simplify your retail business operations. We\u2019re also experts at warehousing, shipping, and order fulfillment services. Want to find out more? <u><a href=\"https:\/\/www.zhenhub.com\/\">Contact<\/a><\/u> us here.<\/p>\n<p>We\u2019ll be more than happy to help!<\/p>\n<p>If you need assistance with reducing logistics costs, you can reach out to our specialists &#8211; hello(a)zhenhub.com or submit an enquiry <a href=\"https:\/\/www.zhenhub.com\/our-story\/#contact-section\">here<\/a>.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reading time:\u00a0 3 min 11s\u00a0 How to Calculate Taxes and Duties for Importing Into UK &nbsp; E-commerce businesses and other individuals shipping goods into the UK should be clear about their taxes and duties liabilities. Although the thought of this tends to drive a lot of people crazy, calculating the &#8230; <a title=\"How to Calculate Taxes for Importing in UK | Updated 2020\" class=\"read-more\" href=\"https:\/\/zhenhub.com\/blog\/calculate_taxes_importing_uk\/\" aria-label=\"Read more about How to Calculate Taxes for Importing in UK | Updated 2020\">Read more<\/a><\/p>\n","protected":false},"author":5,"featured_media":9553,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","inline_featured_image":false,"_uag_custom_page_level_css":"","advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"categories":[11,4,13,12,14],"tags":[],"class_list":["post-9543","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-ecommerce","category-general-logistics","category-startups","category-trade-regulations"],"author_meta":{"display_name":"crystal","author_link":"https:\/\/zhenhub.com\/blog\/author\/crystal\/"},"featured_img":"https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-300x177.jpg","featured_image_src":"https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-600x400.jpg","featured_image_src_square":"https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-600x600.jpg","author_info":{"display_name":"crystal","author_link":"https:\/\/zhenhub.com\/blog\/author\/crystal\/"},"uagb_featured_image_src":{"full":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-scaled.jpg",2560,1508,false],"thumbnail":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-150x150.jpg",150,150,true],"medium":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-300x177.jpg",300,177,true],"medium_large":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-768x452.jpg",768,452,true],"large":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-1024x603.jpg",1024,603,true],"1536x1536":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-1536x905.jpg",1536,905,true],"2048x2048":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-2048x1206.jpg",2048,1206,true],"gb-block-post-grid-landscape":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-600x400.jpg",600,400,true],"gb-block-post-grid-square":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-600x600.jpg",600,600,true],"crp_thumbnail":["https:\/\/zhenhub.com\/wp-content\/uploads\/2020\/02\/calculate_taxes_import_uk-1-scaled.jpg",150,88,false]},"uagb_author_info":{"display_name":"crystal","author_link":"https:\/\/zhenhub.com\/blog\/author\/crystal\/"},"uagb_comment_info":0,"uagb_excerpt":"Reading time:\u00a0 3 min 11s\u00a0 How to Calculate Taxes and Duties for Importing Into UK &nbsp; E-commerce businesses and other individuals shipping goods into the UK should be clear about their taxes and duties liabilities. Although the thought of this tends to drive a lot of people crazy, calculating the ... Read more","coauthors":[],"tax_additional":{"categories":{"linked":["<a href=\"https:\/\/zhenhub.com\/category\/business\/\" class=\"advgb-post-tax-term\">Business<\/a>","<a href=\"https:\/\/zhenhub.com\/category\/ecommerce\/\" class=\"advgb-post-tax-term\">eCommerce<\/a>","<a href=\"https:\/\/zhenhub.com\/category\/general-logistics\/\" class=\"advgb-post-tax-term\">General Logistics<\/a>","<a href=\"https:\/\/zhenhub.com\/category\/startups\/\" class=\"advgb-post-tax-term\">Startups<\/a>","<a href=\"https:\/\/zhenhub.com\/category\/trade-regulations\/\" class=\"advgb-post-tax-term\">Trade &amp; Regulations<\/a>"],"unlinked":["<span class=\"advgb-post-tax-term\">Business<\/span>","<span class=\"advgb-post-tax-term\">eCommerce<\/span>","<span class=\"advgb-post-tax-term\">General Logistics<\/span>","<span class=\"advgb-post-tax-term\">Startups<\/span>","<span class=\"advgb-post-tax-term\">Trade &amp; Regulations<\/span>"]}},"comment_count":"0","relative_dates":{"created":"Posted 6 years ago","modified":"Updated 3 years ago"},"absolute_dates":{"created":"Posted on February 27, 2020","modified":"Updated on October 7, 2022"},"absolute_dates_time":{"created":"Posted on February 27, 2020 8:54 pm","modified":"Updated on October 7, 2022 6:24 pm"},"featured_img_caption":"","series_order":"","_links":{"self":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts\/9543","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/comments?post=9543"}],"version-history":[{"count":1,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts\/9543\/revisions"}],"predecessor-version":[{"id":13500,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/posts\/9543\/revisions\/13500"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/media\/9553"}],"wp:attachment":[{"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/media?parent=9543"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/categories?post=9543"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zhenhub.com\/wp-json\/wp\/v2\/tags?post=9543"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}