When importing from outside of the UK, you will be required to pay VAT on all the costs to purchase the goods and transport them to you in the UK.

Here is an example of how you can get an approximate calculation on the amount of VAT you will need to pay after customs clearance:

VAT = 20% of (UK Duty + Shipping + Cost of the goods)

If you pay your supplier £4000 for your goods, the UK Duty rating for these goods will come to 3.5%, and the shipping quote is £400. (based on early 2020 rates)

UK Duty = 3.5% of £4000 = £140.00

So VAT = 20% of (£140 + £400 + £4000) = £908

Therefore the final import value of total duties and taxes payable would be £1048 (£140 for UK Duty as well as £908 for VAT), plus the £400 shipping cost.

In reality, VAT is calculated differently as any two companies importing identical products for the same cost are required to pay the same Duty and VAT, even if the shipping costs vary. HMRC use VAT Value Adjustment. The shipping cost to get the goods to the UK border is added to a VAT Value Adjust figure which depends on the size of the shipment – this is an average of UK charges to clear and deliver the goods into circulation within the United Kingdom.

Less than container load (LCL) shipments’ minimum VAT Value Adjustment figure is £170, whilst full container load (FCL) shipments sit at £550 and Airfreight shipments have a £100 minimum figure.

What about VAT on imports within in the EU?

Since January 1^st, 2021, the UK have left the European Union which means we are no longer a member of the single market. There is a trade deal in place allowing for zero duty, but only if the goods are originating from the EU or UK (depending on the direction of travel). Import VAT is also a requirement, although to help with cash flow the government have introduced a PVA scheme (Post Vat Accounting) which means you can authorise Westbound Logistics to declare your import entry as ‘PVA’, and your VAT is not payable up front as it traditionally used to be. Instead, it’s simply accounted for on your company VAT return. (Only applicable to VAT registered companies). 

What if I’m VAT registered?

If you are VAT registered, ensure that you use the EORI number linked to your VAT number. Under these circumstances, you can claim back any VAT paid when importing goods for your business to the UK using your VAT return.

When declaring your EORI number to UK Customs, if it is linked to your VAT number then you will received a certificate (C79) from HMRC as evidence that you have paid import VAT. C79 certificates are sent out monthly instead of for each shipment to the address registered to your VAT number, and you should expect to receive them on the 24th of the month subsequent to your import.

In the case where you have misplaced your C79 form, you can contact HMRC who will be able to dispatch a replacement within 2-3 weeks. For further details please contact the VAT Central Unit Microfilm Section (HMRC).

You can discover more information regarding VAT payable on imports here.