It’s the most exciting moment – you’ve been eyeing up that perfect something for weeks, maybe even months, and finally, it’s on its way to your doorstep.
But wait… there’s a catch.
You have to pay customs duty to receive it. Suddenly, the joy of online shopping is gone, replaced by the dread of unexpected customs charges.
Now, you are maybe second-guessing your next online purchase, or perhaps you are wondering – how to avoid customs charges on my orders?
Well, if that is the case, we are here to answer that question!
In this article, we will explain:
- for which goods you have to pay customs charges
- can you actually avoid paying customs duty and import VAT, and
- the risks that come with avoiding them.
If you got a receipt for customs fees that exceeds what you’re ready to pay, we will also show you the only possible way to get your money back.
Without further ado, let’s dive in!
On which goods do you have to pay customs duties?
If you understand on which goods you have to pay import fees, you can eliminate any unexpected customs charges.
Firstly, let’s talk about Brexit and how it affected online shopping.
What changes came with Brexit?
With Great Britain leaving the EU, many changes came, including paying additional fees when buying online from EU countries. It seems that the new rules about purchases from the EU countries left many UK customers confused.
One time, you get your order without having to pay a penny more, while in other cases, you get an unpleasant email from your delivery company stating that your package will be delivered once you pay customs duties on top of the handling costs.
How to know when you will be charged import VAT and duty and when not?
Well, ever since the Brexit transition period, there has been a new threshold value for customs duty and import taxes for goods purchased in the EU.
You will be charged customs duty if the value of your parcel is higher than £135. The exact amount you will have to pay will depend on what you ordered. Additionally, VAT will not be charged at the checkout but once the goods arrive.
Whenever your order is above the threshold value, you can expect to receive an order once you’ve paid back the courier for import taxes and duties. This rule even applies to orders from the EU. Because the UK is no longer a part of the European Union, there are import charges on orders from the EU countries.
There is some good news!
The UK still sticks to the EU-UK trade agreement and Rules of Origin, so if you buy an item manufactured in the EU, you will not have to pay customs duties, so you can save a few pounds on this one extra expense.
Since it is not always that easy to tell where are the items made, we recommend that you contact the retailer and ask – in most cases, they will be more than happy to assist you and tell you the origin of the item.
Now, let’s get a better understanding of customs duties, import tax, and courier handling fees that you will be charged.
What are customs duties?
Customs duties are tariffs or taxes levied on imported goods. In Great Britain, they are collected by the HM Revenue & Customs Department and charged to protect the domestic industries from foreign competitors.
For example, if a certain country has a thriving textile industry, customs duty on textile can be higher in order to protect the domestic companies in this field. Instead of purchasing fabric from abroad, people will be more motivated to purchase from a UK retailer in their own country to avoid paying high customs duties.
In the UK, customs duty is calculated according to the trade tariff and commodity codes, so different products have different duty rates. For instance, If you buy electronics, they won’t be charged at the same rate as running shoes.
However, as long as you purchase items made in the EU, you don’t have to worry about the rate of this fee. For these items, it will be 0!
Import tax
Goods worth over £135 are also subjected to import VAT.
Before Brexit, you would simply pay VAT at checkout and not worry about the additional costs once the goods arrive in the UK. The situation is slightly different now; this tax will be levied upon importing the goods.
The import VAT rate is the same as the normal UK VAT rate – 20%.
However, you should also understand how it is calculated.
VAT doesn’t depend only on the type and value of the goods; you have to take into account the shipping costs as well. The total cost of import VAT is calculated on the total cost of importing goods, including the supplier’s cost of goods, import duty, and shipping to the UK.
That is why it may seem as if you paid too much for the import VAT in the end. HM Revenue & Customs authorities probably didn’t make a mistake – you simply didn’t take into calculation the handling fee.
Courier handling fee
Also, we cannot forget about the courier handling fees!
Because the courier company completes customs handling on your behalf, they charge a bit extra for their service, besides delivery charges. But not every company charges the same. If Parcelforce/Royal Mail delivers your parcel, you will need to pay £8. With DHL, these charges are even higher – either you will pay £11 or 2.5% of VAT and import charges.
Typically, you will receive an email with instructions on how to pay back import fees to the courier. Usually, you’ll receive a link for paying online. You will be given enough time to complete the payment, and then your order will be delivered to you.
Some postal services, such as UPS, will call you to notify you about the charges. If they are missing your contact info, they will deliver the parcel, and you will pay in cash upon delivery. In case you don’t have any cash on you at the moment of delivery, they will instruct you on how to pay these fees and redeliver your package the following day.
Bear in mind that, in case you return goods to EU businesses, you can reclaim most import fees. However, you can’t reclaim courier handling fees, as that fee includes their service and delivery costs.
How to calculate import VAT and customs duty?
In the end, the final bill can be quite pricey!
However, let’s be honest – who has time to go through a lengthy list of commodity codes just to find one value? And then calculate import VAT, find the handling fees, and sum it all? No one!
That is why you can quickly check the rate of customs charges using our Import Duty Calculator.
On which goods you do not need to pay import VAT and customs duty?
If your order is worth less than £135, you don’t need to pay duty. This is the threshold value, so the amount you see at the checkout is the amount you have to pay, and that is all!
VAT will be included in the price, and customs duty is not payable for these goods, so it is probably a mistake if you get charged any import duties. The only unexpected cost might be the postage, but in many cases, even this is paid at checkout.
What about excise duties?
Another thing we want to bring to your attention is that these are rules for clothing, electronics, and similar types of goods. If you are ordering alcohol and tobacco products, then special rules and excise duty rates apply.
You have to pay excise duty for those goods, and the threshold value is not £135. For a bottle of alcohol that is worth £12, you might be charged an additional £2.40. Excise duty rates can be slightly higher than the normal VAT and duty rates, so double-check before ordering. If you decide to return the goods, bear in mind that it is not possible to get a refund of excise duty.
Should I ask a retailer to label my package as a gift?
While it may seem unlikely, it is actually a bad idea. Why? Simply because the threshold amount for gifts is even lower!
Import VAT is charged on gifts that are worth over £39. The rate is 20%, and you should also take into account the courier fees.
For gifts worth over £135, customs duty is charged as well, so the overall amount you will have to pay for these fees is even higher. Labelling a package as a gift won’t save you any money but actually, take money from your pocket.
Can I avoid paying import VAT and duty?
Unfortunately, not really. While it may seem unfair that there are so many extra costs, the rules are rules, and you have to pay import charges if you want to receive your package. The one thing you could do is split your order into several smaller ones.
For example, if you plan on ordering a dress that costs £100 and a pair of shoes that are £70, you will have to pay customs duty because the value of your parcel will exceed £135. The total cost of your order will probably be over £200.
However, if you buy the dress and then a few days later buy the shoes, the value of each package is below £135, so there will be no import charges.
Is this the smartest idea? Not really.
Even if your order is below £135, you still have to pay VAT to the seller at the time of purchase, instead of paying it separately to HMRC. Also, do not forget about the shipping costs, which you have to pay twice in this case.
In the end, you will probably save just a few pounds (if any!), so it is better to have it delivered as one parcel. Moreover, it is illegal and you are putting yourself at unnecessary risk for minimal savings.
Our recommendation for online shoppers is to purchase from EU sellers and items manufactured in the EU. Import VAT is unavoidable – you will be charged this fee anyhow, but customs duty can be avoided. According to the Rules of Origin of UK-EU trade, customs duty is £0 for items produced in the EU.
So, the next time you are browsing through a fashion website, reach out to the retailer and check where the items are produced. If they are made in the EU, you won’t have to pay import duty, and that will lower that bill for customs charges significantly.
Risks of avoiding customs charges
If you are really determined to avoid paying any import charges, you should also be aware of the risks.
For example, you might ask the retailer to put the wrong information on the customs declaration.
Well, you should know that this trick probably won’t work, as HM Revenue & Customs randomly checks packages, and if your parcel seems suspicious, you can expect a delay in delivery or the package will be simply sent back.
In some cases, the parcels are destroyed, so you can not even ask for a full refund from the seller, and you just lose money. If you simply decide to ignore the email from your courier with instructions on how to pay extra fees, you should know that you won’t get your package.
The courier will wait three weeks for your payment and then either send it back or destroy it. If they decide to destroy it, you cannot get a refund from the retailer, and you can’t enjoy the item you wanted for so long. Anyhow, it is only your loss.
Is there anything I can do once I’ve paid customs charges?
Luckily, there is!
If you bought something online and the customs fees are too high, we advise you to pay them, take the package and send it back to the retailer.
Once the retailer gives you a refund for the returned goods, you can submit a claim to HMRC and ask for a refund of customs charges. HMRC will refund you for customs duty and import VAT. However, you will not be refunded the courier fees because this is a fee for their service.
This is probably the safest way to save money and reclaim most of the unexpected customs charges.
We know that the process of reclaiming import VAT and duty might seem long and complicated; searching for the right form, checking customs declaration, gathering courier documents, and filling the accurate data. If you’ve initiated a claim before, you might have been left without a response from HM Revenues & Customs, let alone a refund.
Luckily, we’re the experts in the field, and we can help you get your money back without hassle!
Reclaim import VAT and duty with Duty Refunds
Duty Refunds is an online service that has helped hundreds of UK shoppers to reclaim customs charges on returned goods.
Our experts know the ins and outs of the process and cooperate with couriers to get all the needed documents to initiate the process on your behalf. We will fill and file the claim, and you can just sit back and relax. In about three weeks, the money should be in your bank account!
If you want to check whether you are eligible for a refund of import charges, you can complete a simple form on our website.
Then just send us your tracking/waybill number, and we will take care of the rest!
Final thoughts
How to avoid customs charges?
Unfortunately, avoiding customs charges is not possible but also not recommended.
While seeing the amount on that bill is probably not the most delightful surprise, we recommend that you pay it and then reclaim the money if you aren’t happy with your purchase.
If you have already sent the parcel back or plan on doing it, read our other blogs for further information and contact Duty Refunds to initiate the process of customs duty and VAT refund!