UK valuing goods for Brexit import VAT & customs duties
- Nov 19, 2020 | Richard Asquith
When the UK leaves the EU VAT regime and Customs Union after 31 December 2020, import VAT. Although there will be no customs duties following the confirmation of a Brexit Free Trade Agreement in December 2020.
The rules on how to calculate the base cost of goods vary for import VAT and customs. It is important you understand the rules and differences to avoid under declaring taxes – which can lead to blocked goods and fines – or overpaying and making loses. In all cases, it's important you categorise your goods with HS commodity code for your customs declarations, tariff and VAT calcualtions.
Import VAT goods value
Import VAT is calculated on the customs valuation (see below) plus incidental costs of import. This can include the transport costs between the port of clearance and the delivery address. Import VAT also includes the customs tariffs. You can avoid cash payments of UK import VAT via the new Postponed Accounting deferred VAT.
Customs value for import tariffs
A number of methods may be used to identifying the value of imports for customs purposes. The most common example is the transaction values, which includes:
- Invoice purchase price (evidence required)
- Delivery costs to border
- Calculating customs duties / tariffs
One the value is determined; the tariff rate may be selected. This is based on:
- type of goods;
- ship from country; and
- country of origin.
The UK has set a proposed Global Tariff which will apply to imports from all countries around the world.
Need help with your UK VAT compliance?
Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.