Importing from the US to the UK: Key tax and compliance elements

Michael Boulton, Managing Director International, Whistl

Looking to grow your eCommerce business overseas? The United Kingdom represents a fantastic destination but there are some important local tax and compliance regulations you’ll need to be aware of. We’ve made it simple to understand the eCommerce landscape and what you need to know about importing goods into the UK.

The UK is open to cross-border eCommerce

Historical trade and cultural ties make the UK an obvious choice for expansion. As well as the growth and potential of eCommerce on this side of the Atlantic Ocean.

With 89% of the population eCommerce users and the UK eCommerce market valued at over $140bn, there’s plenty of opportunity for U.S-based online retailers.

Many are already taking advantage of high consumer demand, with the U.S the second-largest cross-border destination for UK online shoppers.  

Understanding UK import taxes and duties

Duties and taxes will vary for every shipment. Criteria such as size and weight, alongside shipping and insurance costs, will have an impact on the total cost of sending items to the UK. In simple terms there are two main tax and tariff considerations:

Value-Added Tax (VAT). You’ll need to register for a VAT number with His Majesty’s Revenue and Customs (HMRC) before you ship goods to the UK. VAT is charged at a standard rate of 20% of the declared value of goods, cost of shipping and import duty.

However, a reduced rate of 5% applies to certain goods, including health products and child car seats. (Most) foods, books and clothes for children, and gifts worth under £39 are classified as VAT-exempt. You’ll still need to declare these items on any VAT return with remittances to be submitted quarterly to HMRC.

Some items, such as alcohol and tobacco, will also be subject to an additional Excise duty. This is calculated on a strength and per litre basis or as a set duty on a gram and packet basis. You will need a specialist customs clearance partner to help facilitate this particular process.

Import Duty. Customs duties will be applied to imports that exceed the UK’s de minimis (minimum) value threshold which is set at £135 (roughly $170 depending on currency fluctuations). These duties typically range from 0% to 25% of the goods’ value, with the exception of gifts.

Documentation and compliance

To ensure a stress-free import experience it’s essential to accurately and comprehensively complete relevant customs documentation.

Key documents and terms include:

• Commercial invoice

• EORI number

• HS Codes

A commercial invoice is required for all international shipments containing goods. It is to be filled out by the shipper and include information that identifies the products being sent, shipper/receiver information and a detailed description of the goods and their value.

Prior to shipment, you’ll also need to register for an Economic Operator and Registration (EORI) number via the UK government website (if you do not already have one/if the UK is the first country within the UK and Europe that you are shipping to).

Harmonisation System Codes (HS Codes), sometimes referred to as Commodity Codes, are mandatory numerical identifiers that accurately describe items and help determine any duties and taxes owed. Imported goods into the UK use a 10-digit HS Code. Before shipping you’ll need to identify the relevant HS Code of the goods being sent and ensure this is accurately logged. Failure to do so is likely to lead to delays and additional costs or in severe cases your items will be seized and destroyed. You can look up commodity codes, duty and VAT rates on the UK Government website.

Prohibited and restricted items

There are certain prohibited items that cannot be brought into the UK for personal use.

These include:

• drugs

• offensive weapons

• self-defence sprays, including pepper spray and CS gas

• endangered animal and plant species

• rough diamonds

Carriers will also have their own protocols and the list below is not exhaustive. Check with your delivery management supplier prior to shipment to avoid any potential cancellations.

Typical restricted items include:

·       Aerosols

·       Ammunition

·       Antiques and art works

·       Batteries

·       Flammable liquids

·       Perishable items

·       Perfumes and aftershaves

·       Weapons

Looking for further guidance? Specialist companies such as Avalara can help if you require additional understanding with tax and compliance.