It’s always exciting to receive a parcel from abroad – less so if you’re charged VAT and customs duty on it. From 1 January a combination of Brexit and new HMRC rules means those charges can be very heavy.
If your purchase is worth £135 or less, the foreign vendor must register for VAT in the UK and add it onto the price of goods that are bought online. (If the item is bought through a “marketplace” such as Amazon then it has to charge and collect the VAT, but the price you see on screen will already include that.) For purchases over £135, though, the vendor does not have to add on VAT, so if it hasn’t (or even if the
goods are worth less than £135, but the vendor has failed to register for VAT), the buyer must pay Import VAT to the carrier (Royal Mail, DHL and so on, who will also usually demand a handling fee).
No VAT should be charged on things that are exempt from VAT in the UK, such as books or children’s clothes – or on gifts, as long as they’re worth less than £39. (Several presents for different people in one package can be assessed separately as long as they are individually wrapped and listed with their values on the outside of the package.) If a gift is worth more, then Import VAT will normally be collected by
Customs duty may also be charged if the value of the item is over £135. The amount will apply to the total cost including carriage, and depend on the value and the country it comes from. It must be paid (plus handling charge) to the carrier. Items from EU countries should be tariff-free if at least half the value of the item is of EU origin and the seller completes the tariff forms correctly.
With such complex changes (and different rules apply in Northern Ireland, and to alcohol and tobacco), it’s inevitable errors will be made. So if high charges are demanded before you get your parcel, or you get a bill from the carrier after delivery, request a clear explanation of how they’ve been worked out before you pay.
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Paul Lewis presents Money Box on Radio 4
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