Running a profitable business means managing costs and revenues wisely, and navigating import duties is a vital part of the equation. It’s crucial to understand the charges involved when importing from China to the UK to sidestep unexpected expenses. This post will walk you through the essentials of handling import duties, taxes, and VAT while offering insights into the rates you might face.
Importing from China to the UK: What you need to prepare
1. Check restrictions
Ensure your products aren’t banned or restricted for import. Certain items, like animal products, medicines, and hazardous chemicals, may require special permits. For example, importing pharmaceuticals without a license could result in delays.
2. Verify export permissions
Confirm that the supplier in China is authorized to export the goods. Reliable communication with your supplier can prevent last-minute issues.
3. Obtain an EORI number
If you don’t have an Economic Operator Registration and Identification (EORI) number, apply for one here. This unique identifier is mandatory for all UK businesses importing goods.
4. Registering goods with the CDS
The Customs Declaration System (CDS) is the UK government’s official platform for managing imports and exports. To import goods into the UK, you should create an account on CDS and register the products you plan to bring in.
5. Power of attorney and customs registration
Both exporters and importers must complete customs registration in China. Without this registration, your goods cannot be customs. Make sure your commercial invoices include the customs registration number.
To streamline importing from China to the UK, consider working with a reliable freight forwarder who can help navigate any customs tax and advise on import limits. Alternatively, a China sourcing agent can manage the power of attorney and customs registration on your behalf, ensuring a smoother process.
6. Find the right commodity code (Tariff Codes)
Use the UK Trade Tariff to find your product’s commodity code. It will determine if import duty from China to the UK applies and the correct rate. For example, electronics may face a lower rate than textiles.
After these, continue reading to learn more about import duties in the UK.
Import duty and VAT from China to the UK
Typically, you must pay the applicable import duty from China to the UK and VAT, as determined by the commodity code. Be sure to check for any available duty reliefs, as failing to pay the required duties can result in your goods being held by customs, leading to additional costs and delays.
If you’re receiving personal items from overseas, no duty or VAT applies, provided you declare the items as “personal belongings” on the customs form.
For general imports, customs duty is calculated as a percentage of the CIF (Cost, Insurance, and Freight) value. Duty rates typically range from 0% to 12%.
Once you’ve determined the duty rate, you should add VAT at the standard of 20%. VAT applies to all products sold in the UK, regardless of origin. For example, whether you buy a water bottle from a UK supermarket or one imported from China, the same 20% VAT will apply.
However, if your business is VAT registered, you can reclaim the VAT you pay on customs taxes from China to UK for the goods you import.
Duty and VAT estimator example
Let’s say you pay your supplier £2500 for goods, with a shipping cost of £500, and the UK duty rate for these goods is 6.5%. Here’s how to calculate the duty and VAT:
- UK Duty = 6.5% of (CIF value= £2500 + £500) = £195
- VAT= 20% of (£195 [Duty] + £2500 [Goods] + £500 [Shipping]) = £639
Therefore, the total cost of importing from China to the UK would include:
- UK Duty:£195
- VAT:£639
- Shipping cost: £500
Contact us today for a detailed breakdown of your import duties and taxes from China to the UK. Save time, avoid costly delays, and make informed decisions for your business.
Exceptions to standard duty and VAT rates
Excise duty
While customs duty is a tax levied on goods imported from outside the EU, excise duty targets some products subject to additional taxation due to their nature. Examples include alcohol, tobacco, and fuel.
Duty and VAT on sample products
You may be exempt from paying customs tax from China to the UK or VAT when importing goods as commercial samples. However, to qualify for this exemption, your goods must meet certain conditions:
- The goods are strictly for sample purposes, not for resale, giveaways, or other uses.
- The goods are intended solely to secure future orders of similar items.
- Sample products should be marked in some way—such as being torn, defaced, or labeled “sample” with indelible ink.
What is anti-dumping duty & how does it relate to import tax?
Anti-dumping duty is payable when goods are “dumped” in the UK. This duty is applicable when foreign companies trade products at a lower cost than in their home market.
Without anti-dumping duties, the domestic market could be flooded with cheap imports, undermining local businesses and driving prices down unsustainably. Common products subject to anti-dumping duties include e-bikes, motorbikes, solar panels, and tiles. These duties can be significant, sometimes exceeding 50% of the goods’ value.
For example, as of July 18, 2018, all e-bikes imported from China are subject to 83.6-150% anti-dumping duties unless the EU has granted the supplier a reduced rate.
How to pay import taxes from China to the UK?
You can typically use the HMRC (HM Revenue & Customs) app to pay import duty from China to the UK and VAT. However, the company handling your customs clearance will usually contact you with the details of how much you owe and the payment method.
If using ASLG’s DDP (Delivered Duty Paid) services, we’ll handle the customs declaration and settle the UK Duty and VAT to ensure your goods are released. Once we have the exact figures for import taxes from China to the UK, we’ll include them in your freight invoice. You can then pay the customs tax and VAT in one seamless bank transfer before delivery.
The process is similar when importing smaller consignments or samples through a postal service or courier. If import duties apply, UK customs will inform Royal Mail or your courier, who will notify you of the due. They’ll tell you the amount and when to pay, so you won’t need to worry about calculating it (unless you believe there’s an error.)
Conclusion
Most goods imported into the UK are subject to import duty and VAT. To ensure your business remains profitable, it’s crucial to accurately assess the full cost of importing from China. You can easily do this by following the steps and calculations outlined in this article. Alternatively, partnering with our Airsupply can help you find the most cost-effective way to import goods, saving time and money.
