How is import duty and/or VAT calculated?
The steps below are a guideline on calculating
basic import duty and/or VAT.
1. CONVERT THE VALUE OF YOUR GOODS INTO GB POUNDS
This sounds easy, but you must ensure that the correct rate of
exchange is used. Each month UK Customs issue exchange rates
which they will use to convert currencies. Therefore, these
are the rates that you must also use. (Visit the UK Customs website
by
clicking here).
2. SHIPPING COSTS (DOOR TO DOOR)
A common mistake when calculating Import Duty and/or VAT is to
forget to add ALL the shipping costs connected with you getting your
goods. Again, using the same exchange rates on the Customs
website, you need to add any and/or all of the following:
-Collection/Delivery costs from the shipper to the port of export
-The cost of any specialised packaging
-Any additional Insurance taken out to cover your goods during
transit.
3. CALCULATING BASIC IMPORT DUTY (if applicable)
Now that you have got your total value of goods (including all the
associated shipping costs) in GB pounds, you next need to know what
percentage of Duty has been allocated by UK Customs for your
particular goods. To do this you need to:
-visit the
European TARIC website.
-Once
there, search for your goods under 'description' and enter the
'country of origin'. This should then allow you to find the
commodity code (keep this code as you will need to ensure that your
clearing agent uses this on the Customs entry) and the rate of
Import Duty that's applicable to your goods.
-Multiply your total value of goods by the Customs Duty
rate. This is the approximate amount of Import Duty that you
would have to pay to UK Customs.
4. CALCULATING THE VAT (if applicable)
The rate of VAT in the UK currently stands at 20%. So
to calculate the VAT, you need to do the following:
-Add the amount of Duty (that you have just calculated) to the total
value of your goods (including the shipping costs)
-Add all the UK charges, such as Customs clearance and delivery
costs (from port of arrival/Bonded Warehouse through to your door).
-Multiply this total amount by 20% to give an approximate amount of
VAT that you would have to pay to UK Customs.