Yes. Goods you import to sell on are generally subject to import VAT and, depending on the product and where it is from, customs duty. If you are VAT-registered you can normally reclaim the import VAT on your return, but customs duty is a real cost you cannot recover.
Import VAT is charged on the customs value of the goods (their price plus shipping and insurance to the UK), plus any customs duty. The standard rate is 20%. Customs duty depends on the commodity code and country of origin, and can be 0% where a trade agreement applies.
Import VAT is recoverable as input VAT if you are VAT-registered and the goods are for use in your business, but customs duty is not. If you are not VAT-registered, the import VAT is simply a cost.
| VAT-registered | Not VAT-registered | |
|---|---|---|
| Goods, shipping and insurance | £5,400.00 | £5,400.00 |
| Customs duty | £216.00 | £216.00 |
| Import VAT | £1,123.20 (reclaimed) | £1,123.20 (a cost) |
| True landed cost | £5,616.00 | £6,739.20 |
Domestic courier fees, brokerage and any storage charges add to the landed cost as well. Price your goods from the landed cost, not the supplier invoice.
If you are VAT-registered and import goods into Great Britain, you can use postponed VAT accounting. Instead of paying import VAT at the border, you account for it on the same VAT return where you reclaim it, so it has no cash-flow cost. You will need your monthly postponed import VAT statement from HMRC, not just the courier's invoice, to support the reclaim.
Whether you are the importer of record matters. If the courier collects VAT from you on delivery, ask for the C79 or postponed statement in your name, otherwise you may find you cannot reclaim it. Our guide to VAT across Amazon and Shopify covers the rest of your VAT position.
Sources: GOV.UK: VAT imports, acquisitions and purchases from abroad, GOV.UK: postponed VAT accounting.
We help online sellers work out true landed cost, including duty and VAT, before stock arrives.
Talk to an AccountantYes. Goods you import to sell on are generally subject to import VAT and, depending on the product and where it is from, customs duty. If you are VAT-registered you can normally reclaim the import VAT on your return, but customs duty is a real cost you cannot recover.
Yes, if you are VAT-registered and the goods are for your business. Reclaim it on your VAT return using your import VAT statement as evidence. If you are not registered, the import VAT cannot be reclaimed.
Generally no. Customs duty is a cost of buying the stock and forms part of its cost for tax. Some relief schemes exist for goods that are re-exported, but ordinary imports for sale carry the duty.
It lets a VAT-registered importer account for import VAT on their VAT return, instead of paying it at the border and reclaiming it later. It removes the cash-flow cost, and you keep the monthly statement as evidence.