What Is the Import Tax From USA to UK?

Importing goods from the United States to the United Kingdom involves financial obligations beyond the initial purchase price and shipping costs. Understanding these additional charges, known as import taxes, is important for individuals and businesses to budget accurately and avoid unexpected fees. These taxes are levied by the UK government to regulate the flow of goods and generate revenue. Importers must be aware of their responsibilities to avoid delays or administrative burdens.

Understanding UK Import Taxes

Import tax in the UK primarily consists of two components: Customs Duty and Import Value Added Tax (VAT). Customs Duty is a levy applied to goods entering the UK from outside its customs territory, serving as a tariff on specific items. Rates for Customs Duty vary significantly based on the type of goods imported. Its purpose is to control the volume and nature of imports.

Import VAT functions as a consumption tax, similar to sales tax, applied to the value of goods imported into the UK. This tax is charged at the point of import rather than at the point of sale within the UK. The standard rate for Import VAT is 20%. Import VAT ensures that goods from outside the UK are taxed similarly to those sold domestically.

Calculating Import Tax Liability

Calculating import tax liability requires determining the “customs value” of the goods, which forms the basis for both Customs Duty and Import VAT. The customs value includes the price paid for the goods, along with shipping, packaging, and insurance costs to the UK border. This valuation method, often referred to as Cost, Insurance, and Freight (CIF), means transportation and insurance expenses are factored into the dutiable amount.

Customs Duty rates are determined by the specific commodity code, also known as an HS (Harmonized System) code, assigned to the goods. These codes classify products internationally, and different goods have varying duty rates, which can range from 0% to 25%. Importers can find the applicable duty rate using the UK Trade Tariff service. The Customs Duty amount is calculated by multiplying the customs value by the determined duty rate.

Once Customs Duty is calculated, Import VAT is applied to a broader total value. This total includes the customs value of the goods plus any Customs Duty assessed. The standard Import VAT rate of 20% is applied to this combined total. For example, if goods are valued at £1,000, shipping is £100, and duty is £50, the VAT would be calculated on £1,150.

Exemptions and Reliefs

Goods imported from the USA to the UK may qualify for exemptions or reduced import taxes. Goods valued at £135 or less are exempt from Customs Duty. However, for purchased goods, VAT is still applicable on consignments valued at £135 or less, though it is usually charged by the seller at the point of sale rather than at import.

Gifts sent between private individuals have specific thresholds for relief. Gifts with a value of £39 or less are exempt from Import VAT, and Customs Duty is not charged on gifts valued at £135 or less. For gifts valued between £135 and £630, a reduced Customs Duty rate of 2.5% may apply, while gifts exceeding £630 are subject to higher rates based on their commodity codes. To qualify as a gift, items must be described as such on the customs declaration, sent from a private person to a private person, and intended for personal use without any commercial element.

For individuals permanently relocating to the UK, personal belongings and household goods can be imported duty-free. This relief applies if the items have been owned and used for at least six months prior to the move. To claim this “Transfer of Residence” (ToR) relief, an application must be completed. New or high-value items purchased within the last six months may not qualify for this duty-free status and could incur import duty or VAT.

The Import Tax Payment Process

For most consumers, shipping carriers facilitate the payment of import taxes for delivery to the UK. Couriers such as FedEx, UPS, or Royal Mail act on behalf of His Majesty’s Revenue and Customs (HMRC) to collect these charges. The carrier notifies the recipient of the charges due, often through a customs charge notification or a bill.

Payment is usually required before the goods are released from customs and delivered. This payment can be made online, by phone, or upon delivery. Carriers may also offer the option to pre-pay duties and taxes when the shipment is initiated, which can expedite the customs clearance process. If the import taxes are not paid within a specified timeframe, the parcel may be held or returned to the sender.