How to calculate duty in the UK and pay it correctly

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The first step in calculating duty is identifying the right commodity code. This is a key element, without which you cannot carry out the next steps. You can read more about HS and commodity codes in a separate article. Next, you need to convert the value of the goods into British pounds (GBP). For this you use the HMRC exchange rates made available through the UK Trade Tariff (including monthly rates); check HMRC guidance for the right rate (UK Trade Tariff — exchange rates). The third step is calculating the "Value for Customs Duty", i.e. the value on which duty is calculated (see also the customs value of goods). Under Method 1 (transaction value) this is the price paid or payable, plus the cost of transport, insurance, loading and handling connected with delivering the goods to the UK border (gov.uk — Method 1). There are six methods for working out this value (from Method 1 to Method 6, the fall-back method), applied in a specific order: if the first method cannot be applied, you move on to the second, then the third, and then to Method 4 or 5 (Method 5 may be used before Method 4). If you use Methods 2 to 6, HMRC may ask why you did not use an earlier method. HMRC requires documents and information about your imports to be kept for at least 4 years (gov.uk — Prepare to work out the customs value). Once the "Value for Customs Duty" has been calculated, you can move on to calculating the amount of duty. Duty is calculated from the "Value for Customs Duty" multiplied by the rate under the relevant customs tariff. Import VAT is not part of the base on which duty is calculated — it is charged separately (see the differences between duty and VAT). Once the amount of duty due has been calculated, the final step is, of course, paying it. Payments are made through the Customs Declaration Service (CDS). Options include a duty deferment account (one monthly payment by Direct Debit; see how a deferment account works), a CDS cash account, immediate payment and — for import VAT — postponed VAT accounting on your VAT Return. A customs agent can use your deferment or cash account once you have given them authority in CDS. Details: gov.uk — How to pay duties and VAT on imports. Want to be sure about the code, customs value and payment method before your first shipment? Contact us and we will check the details. How we quote is explained on the page how much UK customs clearance costs, and a worked example is in the guide how to calculate duty and VAT when importing from the UK.

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