How to Calculate Duties and Taxes on Imports to UK is a critical step for any international trader. Import duties and taxes are mandatory charges levied by the government, which depend on the product's classification (HS Code), its customs value, and its country of origin. In the UK, the official authority is HM Revenue & Customs (HMRC). Currently, Customs Duty is not charged on commercial goods valued at £135 or less (the Duty De Minimis threshold). However, Value Added Tax (VAT) is due on all commercial imports, with the collection method changing at this £135 threshold.
Customs duties in UK are calculated based on the UK Global Tariff (UKGT), which is structured around the international Harmonised System (HS) codes. For import declarations, you must use the full 10-digit UK Commodity Code, which provides the specific duty rate for your goods. The correct classification is paramount, as an error can lead to incorrect duty payments, delays, or penalties. The duty rate is applied to the customs value of the goods, which is typically the transaction value (the price paid), plus certain costs like freight and insurance up to the UK border (a valuation basis similar to CIF). The final duty amount is then paid in Pound sterling (£, GBP).
To accurately calculate import tax in UK and the total landed cost, you must first determine the customs value. This value is the basis for calculating Customs Duty and is also used to calculate the import VAT. The calculation follows a specific sequence:
1. Customs Valuation: The dutiable value is generally the price paid for the goods, plus all costs incurred up to the point of entry into the UK, including freight and insurance. This is the value upon which the Customs Duty rate is applied.
2. Customs Duty Calculation: The duty rate (found using the 10-digit UK Commodity Code) is applied to the customs value. If the total consignment value is £135 or less, the Customs Duty is zero, as it falls under the Duty De Minimis threshold. If the goods originate from a country with which the UK has a Free Trade Agreement (FTA) and meet the Rules of Origin, a preferential (often 0%) duty rate may apply, regardless of value.
3. Import VAT Calculation: The UK’s main import tax is Value Added Tax (VAT), typically at the standard rate of 20%. The VAT is calculated on the sum of: * The customs value of the goods. * The Customs Duty amount (even if zero). * Any other charges, such as freight and insurance, up to the final destination in the UK.
This comprehensive calculation is how import duty is calculated in UK and how the total tax liability is determined. Importers must submit their declarations using the Customs Declaration Service (CDS), which has replaced the legacy CHIEF system for all imports and exports in 2025. Using an import tax calculator UK tool that incorporates these steps and the correct 10-digit codes is essential for estimating the final landed cost.
Determine the 10-digit UK Commodity Code (import tariff code) for your goods using the UK Global Tariff (UKGT).
Establish the Customs Value (dutiable value) of the goods, including the cost of the goods, plus transport and insurance costs up to the UK border.
Calculate the Customs Duty: Apply the UKGT duty rate (or a preferential FTA rate) to the Customs Value. If the consignment value is £135 or less, the duty is £0.
Calculate the Import VAT: Apply the VAT rate (usually 20%) to the total of (Customs Value + Customs Duty + all other costs to the final UK destination). This total is the VAT-able value.
Low-Value Commercial Import (Value £100): No Customs Duty is charged (below £135 de minimis). VAT is collected by the seller/marketplace at the point of sale, not at the border (Point of Sale VAT regime).
High-Value Commercial Import (Value £500): Customs Duty is calculated on the Customs Value (e.g., 5% duty rate on £500). Import VAT (20%) is calculated on the total of the Customs Value, the calculated Duty, and all shipping costs to the final destination. The declaration is made via CDS.
Misclassifying goods by using an incorrect 10-digit Commodity Code, which leads to paying the wrong amount of customs duties in UK.
Failing to account for the low-value consignment VAT rules, resulting in double taxation or incorrect VAT collection at the point of sale for goods under £135.
Ignoring Rules of Origin, which prevents claiming preferential (zero or reduced) duty rates available under the UK’s Free Trade Agreements.
The UK has a specific low-value consignment regime for imports valued at £135 or less. For these shipments, the seller or online marketplace must register for UK VAT and charge the VAT to the customer at the point of sale. This means the buyer should not be charged VAT again upon import. For consignments over £135, the VAT is typically collected at the border, often via the carrier, and paid to HMRC. Additionally, the UK operates Freeports, which are special economic zones where different customs and tax rules apply, offering potential duty and tax deferrals or exemptions for goods processed within the zone.
The Customs Duty De Minimis threshold for commercial imports into the UK is £135. Goods valued at £135 or less are exempt from Customs Duty.
Import duty is calculated by applying the specific duty rate (from the 10-digit UK Commodity Code) to the Customs Value of the goods. The Customs Value generally includes the cost of the goods, plus shipping and insurance to the UK border.
The main import tax in the UK is Value Added Tax (VAT), typically charged at the standard rate of 20%. VAT is due on all commercial imports, regardless of value.
HM Revenue & Customs (HMRC) uses the Customs Declaration Service (CDS) for all import and export declarations in 2025, having fully replaced the older CHIEF system.