Import duties are the taxes payable by someone seeking to import goods into one country from another. In the UK, import value-added tax (VAT) is also payable on many goods and services. These duties are most commonly paid by businesses who regularly import materials or services necessary in the running of the company. Individuals may also be liable however, particularly when ordering expensive items from abroad or returning from foreign holiday with large purchases in tow.
Import duty is calculated on the type of goods concerned, their value and their country of origin. Goods imported into the U.K. from other European Union (EU) member states are exempt from duty as are goods where the duty is paid prior to their landing in the country. Customs duty must be paid by travellers who exceed their duty free allowance. Anyone ordering items from outside the EU is only liable for VAT if the value of the order is above the limit for that country as specified by HM Revenue and Customs. There are roughly 14,000 different classifications of import duty. Information on specific imports can be found by contacting HM Revenue and Customs or visiting hmrc.gov.uk.
Excise duty is a tax on specific excise goods such as alcohol and tobacco. These are products that are subject to extra taxation within the U.K. and excise duty seeks to ensure that this added taxation remains applicable even when these goods are purchased abroad. Goods brought to the UK from EU member states are exempt providing duty was paid in that state. Travellers returning from non-EU states are only liable for excise duty should they exceed their duty free allowance. Items purchased online from the U.K., however, are subject to excise duty on the entire transaction. The rules on commercial import of excise goods are more complex but information is available at hmrc.gov.uk.
VAT is usually charged on any purchase of goods and services from VAT registered businesses within the UK. EU goods imported into the UK are not subject to extra VAT unless they come from an EU Special Territory. In this case import VAT is charged at a similar level to U.K. VAT. The EU Special Territories are the Aland Islands (Finland), the Canary Islands (Spain), the Channel Islands (U.K.), the French Overseas Departments of Guadeloupe, French Guiana, Martinique and Reunion and Mount Athos (Greece). The tax systems of these territories differ substantially from those of EU member states resulting in VAT being charged upon import rather than upon purchase in that territory.