If you are a business that is involved in importing goods or you’re about to start importing items into the UK, it’s worth knowing that there are different costs associated with importing such goods. One of these is Value Added Tax (VAT), although there are also customs duties and excise duties (such as the import of alcohol and tobacco). With this in mind, you’ll want to know how much VAT you’ll need to pay when importing. This is the question we attempt to answer in this post.
How much is import tax into the UK?
You will be required to pay VAT on all goods that are sent from outside the UK to Great Britain and outside the UK and the EU to Northern Ireland. However, there is an exception and this is that gifts that are worth £39 or less are exempt from VAT. If your imported item is not a gift, you will need to pay VAT on the value of the goods, the postage, packaging and insurance as well as any additional duties that you may owe. The VAT you’ll be charged will depend on the type of goods that you’re importing.
For example, if you are importing goods that are worth £135 or less in total, you’ve bought the goods yourself and they are not excise goods, the seller will have included VAT in the total price that you’ve paid.
You will, however, need to pay VAT if the goods are gifts that are worth over £39 or if they are excise goods.
How much can I import without paying duty in the UK?
If you want to know how much you can import without paying duty in the UK, you will need to consider the type of goods you are importing (e.g. they must not be alcohol or tobacco) and they must not be gifts worth over £39 and if you want to avoid paying VAT, the goods must be valued at £135 or under.
A practical example of the cost you’ll need to pay
Say that you have to pay £2,000 for your goods. The UK Duty rating for these goods is 3.5% and the shipping quote is £300. First, add the final price and the shipping costs together to give you £2,300. Multiply this by 3.5% UK Duty and you’ll get £80.50.
VAT will be calculated at 20% of the UK Duty, in addition to the shipping cost and the cost of your goods. This means you’ll pay £476.00 in VAT to bring your goods in. When added to the UK Duty, the cost of VAT and duties combined will be £556.50.
Concluding remarks
Although VAT may be a fixed percentage, you need to be aware that some goods are exempt from VAT while others are charged a higher percentage. In addition, the types of goods you bring into the UK will also matter. This can make calculations complicated and is a good reason to make use of the right tax accountants in London. At Tax Navigator, we offer outsourced bookkeeping services in London for your ease and convenience and to give you greater peace of mind and control over your expenditure. Reach out to us today to see how we can help solve some of your business’ challenges.
0 Comments