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Alexander Skeith's avatar
Alexander Skeith
London, UK
Award-winning copywriter and brand voice strategist.
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Award-winning copywriter and brand voice strategist.
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Brand Messaging and Strategy for Feel
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Sample long-form writing on custom duty, import taxes and VAT <Title Tag> Custom duty and Import tax: Everything you need to know <meta description> Get the full low-down on custom duty and import tax, and find out the easiest way to reclaim these funds on purchases you’re returning to the EU. <Intro body> Custom duty and import tax is a topic that can make even the most experienced online shoppers more than a little nervous. The good news is that once you understand how they work, they’re not nearly as scary as they might seem. And, you’ll be better equipped to pursue a refund whenever you happen to return an online purchase that’s come from overseas. Here’s a quick rundown on everything you need to know about the finer details of custom duty and import tax. <H1> What’s the difference between custom duty and import tax? <body> It’s the job of customs authorities to collect duties and taxes on goods coming into and out of a country. But, when it comes to shipping, the words 'duties' and 'taxes' are very often perceived to mean the same thing. This isn’t actually the case at all. When we say ‘duties’, we’re referring to customs duties or custom charges, which are taxes that are applied to cross-border goods which are collected by customs authorities both to generate revenue and protect local industries. These duties can come in a variety of forms ranging from trade tariffs to excise duties. Crucially, most duties are paid by the importer, with the exception of export duties which are paid by the exporter. Import taxes on the other hand, are fees applied by the government on purchased items coming into a country. These taxes can go by different names in different localities — including value-added tax (VAT), sales tax, and goods and services tax (GST) — but they’re essentially the same thing. Tax rates can vary from 0% to 20% or even higher depending on both the country and product. In almost all cases import taxes are paid for by the importer and are placed on almost all purchases arriving from overseas. You’re likely already very familiar with value-added tax, which is more commonly known as VAT. This is an import tax that works as a kind of consumption charge on goods or services. It plays an important role in business and can be charged on a range of items. VAT is a tax which is ultimately paid by you, the customer, instead of working as a tax on individual businesses. <H2> When are custom duty and import tax applied? <body> You’ll be charged custom duty on all goods worth more than £135 (and all excise goods) that are being sent from outside the UK (or the UK and the EU if you’re in Northern Ireland). In these cases, you’ll need to pay custom duty on both the purchase price of the goods, as well as on postage, packaging and insurance. When it comes to gifts, you’ll generally need to pay 2.5% on goods above £135 and up to £630. Rates tend to vary for gifts over £630.  Special rules apply to excise goods  — which can be summarised as wine and other exciting intermediate products (like sherry, port and other spirits), tobacco, and mineral oil (such as petrol or diesel oil). Excise duty is applied to all of these items regardless of their purchase cost. <H3> What are custom duty and import tax based on? <body> So, what factors inform the rates being applied to your latest online purchase from overseas? In the UK, import tax and custom duty amounts applicable to a shipment are determined by a number of factors including the HS code (which classifies the type of product), the goods description on the commercial invoice (which includes the product's end-use), as well as the value of the goods (including freight and insurance fees) help customs to determine the custom duty and import tax and to clear your shipment. International trade agreements between certain countries can also have a bearing on the amount import taxes applied to a shipment. Wherever you need to settle these charges you’ll be contacted by Royal Mail, Parcelforce or the courier company and they’ll send you a bill stating exactly what fees you need to pay. They’ll normally hold your parcel for about 3 weeks and, if you haven’t paid the bill by then, your parcel will be returned to the sender. In the past, even calculating the amount you need to pay on custom duty has proved a little taxing (pun intended). This has involved determining the duty percentage rate on the goods being shipped (a rate that varies depending on the country the item is being shipped to). These can be found by visiting the customs or trade tariff page on the government website of the destination country. Then it’s a case of adding up the value of the goods, plus freight costs, insurance and any additional costs, then multiplying the total by the duty rate.  Similarly, calculating import tax has traditionally required a bit of number crunching. This has involved finding out the sales tax (VAT) rates of the country the item is being shipped to. For example, the UK has three VAT rates: 0%, 5% and 20%, which is the standard rate for most goods and services. So if the shipment is a men’s sweater, the rate is 20% because clothing for adults falls under this standard VAT rate. Once the VAT on a shipment has been calculated, customers have then had to add up the goods value, freight costs, insurance, and import duty, and then multiply the total by the destination country's applicable VAT rate. Thankfully, we’ve managed to do away with a lot of this heavy lifting. By simply accessing our handy calculator (https://dutyrefunds.co.uk/import-duty-calculator/#calculator) and entering in your purchase price, item description and courier, you’ll be able to find out what custom duty or import tax is set to be applied to your shipped items. <Header> Claiming a refund on custom duty or import tax <body> Historically, customers have had to jump through a lot of hoops to get refunded for custom duty and import tax on returned items. The method of claiming repayment has typically depended on how the initial customs declaration was made. If it was dealt with by the Customs Handling of Import Excise Freight (CHIEF) system, customers are still able to claim repayment online — provided you have a Government Gateway number and are already registered for the service. If the custom declaration was made via the Customs Declaration Service (CDS), customers are able to submit a claim using the CDS version of Form C285. In both these cases you’ll need a whole list of items to tick off including the sales invoice, the packing list, the amount of import taxes paid, and your bank details if the refund is to be paid directly. But did you know, there’s an easier way? If you’ve returned goods purchased from within the EU in the last 365 days, Duty Refunds provides you with a quick and easy solution. In fact, we’re now known as the UK’s leading import VAT and duty specialist. Whether you need to reclaim customs charges (https://dutyrefunds.co.uk/reclaim-customs-charges/), get a customs duty refund (https://dutyrefunds.co.uk/reclaim-customs-charges/customs-duty-refund/) or import VAT Refund (https://dutyrefunds.co.uk/reclaim-customs-charges/import-vat-refund/), we’ve made the process as frictionless as possible.
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Andrew Shameen
London, UK
✈️ Premium Ghostwriter for Aviation & Luxury Content
✈️ Premium Ghostwriter for Aviation & Luxury Content
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