Can You Avoid Duty? How to Calculate Duty Between the UK and the EU After Brexit: Rates, Preferences and Deferral Options

Since the United Kingdom left the European Union (Brexit), trade in goods between the UK and EU countries has changed significantly, especially regarding duty. Many businesses are therefore asking how to calculate customs charges, whether duty can be avoided, and how to pay less in trade between the UK and the EU.

Duty after Brexit — what has changed?

Before Brexit, the United Kingdom was part of the EU Customs Union, meaning there was no duty on goods traded between EU member states. However, since leaving the EU on 1 January 2021, goods exported and imported between the UK and the EU are subject to new trading rules. Although the two sides signed the Trade and Cooperation Agreement (TCA), not all goods are duty-free.

How to calculate duty — an example from UK-EU trade

Suppose a company in Poland imports power tools from the United Kingdom worth PLN 50,000. Transport costs are PLN 5,000, giving a total customs value of PLN 55,000.

The tariff code for power tools is 8467 21 10 90, and the duty rate is 2.7%. This means the duty due is PLN 1,485 (PLN 55,000 x 2.7%). Next, VAT must be calculated on the sum of the customs value and the duty. If the VAT rate is 23%, the VAT due is PLN 12,967.55. The total customs and tax charges come to PLN 14,452.55.

When can duty be avoided?

Despite Brexit, there are situations where paying duty can be avoided. This follows from the Trade and Cooperation Agreement, which sets out preferential duty rates for goods meeting the rules of origin. This means that if goods are wholly manufactured in the United Kingdom or the EU, they can be duty-free. To use this exemption, the origin of the goods must be documented, for example with a certificate of origin or a statement on the commercial invoice.

Without a document confirming origin, businesses must expect to pay duty in full under the erga omnes tariffs.

Deferring duty payment

Many businesses also make use of the option to defer duty payment. One example is using a customs warehouse, which allows duty and VAT payment to be postponed until the goods are actually released onto the market. This is especially useful for companies that import large quantities of goods but do not intend to put them all up for sale straight away.

Trading rules after Brexit — the key changes

• Customs declarations are now required for both imports and exports between the United Kingdom and the EU.
• Border checks: goods may be subject to sanitary, phytosanitary and other inspections.
• EORI: companies must hold an EORI (Economic Operator Registration and Identification) number to trade with the United Kingdom.

Calculating customs charges after Brexit can be complicated, especially for goods exported and imported between the United Kingdom and the EU. The amount of duty depends on the customs value of the goods, the type of goods (HS code), and the country of origin. To benefit from preferential rates, the origin of the goods must be carefully documented.

If you are not sure how to correctly carry out customs procedures, it is worth using the help of a customs agency, which will handle all the formalities, including preparing documents and representing you during customs clearance.

See also the video

If you want to quickly understand how the rules of origin affect duty between the UK and the EU, this material is a good complement to the topic of preferences.