Since the UK left European Union, there have been a lot of changes – some good, some bad. The vote has had a huge impact on British businesses, with some thriving and others struggling to keep up.
So what about online shopping? Has Brexit affected that too? Have prices gone up? Is it harder to find the products you want? Will you face extra charges like customs duty once the goods arrive in the UK?
Regardless of your opinion on Brexit, it’s essential to know what the consequences are for UK shoppers.
In this post, we take a look at how things have changed since the transition period and whether or not it’s worth shopping online from EU retailers in the current climate.
Also, we will explain how you can reclaim customs charges if you have returned the items to the EU retailer in the last 365 days.
Keep reading to learn more!
UK shoppers have to pay customs charges on orders from the EU
The biggest benefit of being a part of the EU and its Customs Union is the absence of customs charges on orders from EU retailers.
Ordering from Europe before Brexit was a breeze – you would go online, pick the items you wanted, pay for the goods at checkout, and have your items delivered in a few days without any additional fees or charges.
However, buying online from the EU after Brexit has become much more complicated due to the new UK customs rules.
If the value of your cart exceeds £135, customs duty kicks in, so instead of paying only for your clothing, shoes, or electronics, you have to pay duty and VAT, and you might face courier handling fees too.
In case you are unfamiliar with the rates of these charges and how to pay duty and VAT, here is a quick breakdown:
Customs duty
Customs duty is a tax levied on goods brought into the country if the consignment value of the goods (value of the parcel minus delivery charges) exceeds £135.
The rate can vary significantly and depends on the type of goods and where they come from. For example, you may have to pay higher customs duties on luxury clothing or shoes than clothing.
The UK and EU still stick to the Rules of Origin agreement under the Trade and Cooperation Agreement. So, as long as you are importing from different EU countries and items are manufactured in the EU, the import duty rate will be 0%.
If you are purchasing goods from non-EU countries, for example, a US retailer, the rate of customs duties will be higher. You can check the commodity codes and rates in Trade Tariff.
Do not mix up the customs duty with excise duty.
The excise duties are charged for alcohol and tobacco and at a different rate than the rest of the goods. Also, excise duty is non-refundable, so this is another thing you should take into account.
Import Value-Added Tax (VAT)
Another tax you will be charged is import VAT (value-added tax).
If the value of your parcel is below £135, you will be paying normal VAT at checkout. However, you have to pay import VAT over this value once the goods enter the UK.
The rate of import VAT is always the same, and it is 20% (the same as the UK VAT). It may seem that the rate is higher because of how it is calculated.
The customs authorities consider the value of the goods as well as transportation and customs duty when they determine the amount that should be paid for import VAT.
Handling fee
Luckily, you don’t have to deal with customs authorities yourself, and your courier service can simply cover the costs for you. Then they will send you the bill, and you will receive your parcel once you pay them back.
For this type of service, they charge a small fee, called the handling fee, and the rate depends on the type of courier company.
For example, if Parcelforce delivered your goods, you will spend £8 for their handling charge. Another delivery company, such as FedEx, DHL, or UPS, will charge either a fixed rate or 2,5% of combined customs duty and VAT charge.
Also, one courier firm might allow you to pay the courier directly upon the delivery, while others have the option to pay online. The postal service will send you an email with billing information and instructions on how to pay import VAT and customs duty.
If you decide to return the goods, you can reclaim import VAT and customs duty. However, you cannot reclaim courier handling fees – it is not charged by HM Revenue and Customs but by the courier company.
Use our import duty calculator to get a breakdown of customs charges
The import charges and extra fees should not stop you from buying online from EU retailers.
If you want to know beforehand how much you will have to pay, you can get an accurate breakdown of customs charges using our Import Duty Calculator. Just put in the value of the goods, type, and the courier company delivering your items, and get the answer in just a few seconds.
You can buy less outside the UK
The Leave vote had a quite negative impact on the value of the British pound, and the pound’s exchange rate against other foreign currencies has fallen. According to the source, the lowest fall of the sterling pound occurred in 2019.
So, you can get fewer items for the same amount of money you would spend while buying online. Also, let’s now forget about the shipping costs you have to pay to courier firms, so if you want a good bargain, better check out the offers of UK retailers.
Image Source – Economics Observatory
Plenty of bargains
As said, if you are looking for a bargain, look in the UK.
The sterling pound has fallen, and so have prices in the stores, and while you cannot go on a shopping spree in Europe, you can in the UK and probably get more than you have planned.
Cheaper clothes in online stores
Apparently, being a member of the EU leads to an increase in the price of consumer items, like clothing and shoes.
Well, now that has changed. Great Britain doesn’t have to stick to the EU requirements, and the clothing is cheaper.
Online stores tend to adjust their prices sooner than physical stores, so once again, if you are looking for a good bargain, we suggest to order online from a UK retailer.
Low prices are temporary
If you want to take advantage of lower prices, start shopping soon!
The sterling pound will slowly stabilise, then rise, leading to the stores raising their prices again.
Electronics are more expensive
The rule of prices falling has an exception – if the goods are not manufactured in Great Britain, their prices will be higher, which is the case primarily for electronics.
Many companies such as HP, Cisco, Lenovo, and Dell had to increase their prices for the UK market because of the pound’s fall. So, if you plan on buying a new PC, laptop, or smartphone, prepare to spend a bit more money than expected.
Higher import taxes
As said, the biggest benefit of being a member of the EU was the absence of import taxes. You could shop freely in any EU country retailer without worrying about customs charges.
Since the Brexit transition period, if you spend more than £135, the import VAT is charged at a 20% rate, the total cost rises, and worry-free shopping is gone.
You will spend more money overall
Even though prices of certain things will be lower, overall you will spend more money. The sterling pound will stabilise and then rise, leading to an increase in prices.
Also, we cannot forget about the import fees. It is highly unlikely you will be able to give up shopping from abroad just to avoid customs charges.
And this shouldn’t even be a solution, especially because you can get money back from HMRC if the items don’t suit you and you have returned or plan on returning items to the EU retailer.
Wondering how? We are here to explain how you can refund customs charges on returned goods.
Reclaim customs charges on returned goods
UK shoppers are eligible for a refund of customs costs in case they have returned the items and received a refund from the retailer.
You can refund customs duty and import VAT, and the handling fee is non-refundable because it is a tax levied by the courier, not the HMRC.
Many UK shoppers don’t do this or talk about the process so much because it can be quite challenging and exhausting.
In the beginning, it may seem simple – all you have to do to start the process is go to the gov.uk website and find and fill out the C285 form online. Then print it, and mail it with the courier documents, proof of refund from the retailer, and other relevant forms.
However, the process can last up to six weeks, and HMRC might deny your claim without notifying you. This happens quite often as one incorrectly filled field on the claim leads to the rejection from HMRC. Because you never receive feedback, you are left in the dark to wonder what was incorrect in your claim.
Luckily, HMRC allows UK shoppers to submit the claims through a freight forwarder or an agency, and that is when Duty Refunds steps in!
Reclaim customs charges with Duty Refunds
Our mission is to help UK customs order from Europe worry-free, knowing that they can refund import duty on returned goods in just three weeks.
Duty Refunds allows you to stay in the comfort of your home and still get your money back for customs charges.
We work with different courier companies and HMRC, ensuring that all of the needed documents are there and filled correctly.
All we need from your side is the tracking/waybill number. During the process, you can check the status of your claim on your account on our website.
Final thoughts
Brexit has brought a lot of uncertainty, especially for online shoppers, so it is essential to get familiar with the changes.
The things to keep in mind are that you might face customs charges when shopping online and that there might be an overall rise in prices when shopping from abroad.
The Leave vote shouldn’t stop you from buying from your favourite EU retailers. Remember that UK shoppers are eligible for a refund of customs charges when they return the goods, and you don’t have to go through the process alone!
Initiate your claim with Duty Refunds in just a few clicks, and our experts will take care of everything for you – from gathering the documents to submitting the claim. We will get your money back in just three weeks.
Happy shopping!