There are various issues you need to consider regarding customs. This page is about the first consideration – the customs value of the goods.
The rate of customs duty (tariffs) applied to imports depends on four things:
- the customs value of the goods;
- the category the goods fall into;
- the country they are being imported into; and,
- where the goods "originate".
This page is about the first consideration – the customs value of the goods.
Often this will be straightforward, but there can be complications. Traders will want to understand the rules to make sure they pay the right amount of duties on imports. Goods valuations must be evidenced and can subsequently be challenged by the customs authorities. In the UK HMRC can go back three years.
How do I calculate value for duty purposes?
HMRC recognises six "methods" for calculating value for customs duties. You are expected to try "method 1" first.
Method 1 is the "transaction value", that’s the price the importer pays before bringing the goods into the UK. That will often be the invoiced amount, but HMRC will expect some costs to be added on if they’re not already reflected in the invoice. Examples include delivery costs to the UK border (currently to the EU border) or commission (except buyer's commission). Equally, some costs should be excluded from the customs value. Examples of costs to exclude include delivery costs within the UK or taxes paid in the country of origin.
In some cases, the "transaction value" won’t be clear, perhaps because the goods are supplied on consignment or on loan. There are therefore a further five "methods" that can be applied, depending on the circumstances.
Full details of costs to include/exclude from the ‘transaction value’ and of the other five "methods" can be found in HMRC’s detailed guidance:
In each case HMRC expects the value to be evidenced. More detailed guidance on valuation, including the evidence that HMRC will accept is set out in Notice 252.
How do I calculate value for import VAT?
HMRC will use the same method to calculate import value for VAT purposes. However, there are some costs that needed to be added to the value for VAT purposes. These include incidental expenses, including delivery incurred up to arrival at the first destination in the UK and duties and levies paid on import to the UK.
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