This post was reviewed for accuracy on 18/11/2024
We work with a lot of first-time shippers, who always ask us ‘Do you pay customs tax from China?’. In this blog, we will tell you everything you need to know about paying customs tax on your import. Read on to learn from the experts of international shipping!
What Is Customs Tax?
HMRC applies a customs tax on any goods entering the UK from abroad, valued above £15 or any excise goods. It applies to purchases for private use and businesses that buy for commercial use. So yes, it does apply to goods from China too!
Whether it’s purchasing online from abroad, purchasing while abroad to be sent to the UK, or importing gifts… When valued above the threshold, they all have customs tax applied. This, however, doesn’t apply to ‘personal belongings’ being sent back from another country; in which case they must be declared as such at customs.
Customs tax is split into UK duty and import tax. Generally, the duties range from 0% to 25% of the goods’ value which is determined by the type of goods being imported. Standard import tax is 20% on top of the UK duty unless your products are subject to reduced tax (such as 0% rated for baby clothes).
The purpose of a customs tax is to raise income for the local government and give a market advantage to locally sourced produce (which is not subjected to import duties). On a more political side, sometimes customs taxes are raised to penalize a specific nation for its high import duties.
How To Calculate Customs Tax From China
Before choosing to import goods, we would recommend gauging the costs first, so you can determine whether it is economically viable for your business to do so.
To calculate customs tax from China to the UK, you will need to use the Government Trade Tariff service. You then need to input the product that you are selling and look up the third-country duty rate (customs duty applicable to all imports originating from a non-EU territory).
We have a step-by-step guide on how to navigate HMRC’s trade tariff page to help you find your commodity code.
You then calculate the UK Duty percentage on the total value of goods, the shipping cost, and insurance. Sounds like a hefty equation… so we have a duty and VAT calculator to make it that much simpler. It helps when you get an accurate quote for LCL shipping without any hidden costs.
Paying Customs Tax From China
Before you come to pay import tax on imported goods, you will have already established the necessary taxes you need to pay, such as import VAT, UK Duty, excise duty, or anti-dumping duties. You’ll have also prepared all the necessary documentation for shipping (with our assistance, of course).
So, what does paying customs tax from China actually entail? Well, if you’ve chosen to ship via Shippo, then we will have declared your goods to HMRC and pay the UK Duty and Taxes on your behalf! We do this at no extra fee (unlike other companies).
Our invoices include any relevant shipping costs all in one place, making it much simpler for our clients to keep track of their payments! Unlike shipping with other companies, you will not require a deferment account, which allows importers to delay paying customs tax. This requires prior authorisation from HMRC.
Instead, you can use Postponed VAT accounting (PVA), which will support the cash flow of your business, as they align the payment of import VAT and custom duties with their financial cycles. PVA allows you to declare and reclaim import VAT on the same VAT return, instead of needing to pay upfront on the import.
Common Mistakes Made When Paying Customs Tax
We have a separate blog about common mistakes to avoid when importing to the UK, some of which will impact the amount of customs tax you must pay.
It is important that anything paid to the supplier is included on the commercial invoice such as the cost of packaging or moulds used to manufacture your products. Missing these out could lead to penalties here in the UK as HMRC has the right to check bank statements if they feel anything is being underdeclared.
Another mistake when paying customs tax is using a commodity code advised by your supplier for import declaration. It is your responsibility as an importer to choose the correct commodity code for your goods. Importers must exercise due diligence and check the commodity code using the classification rules for all goods declared to HMRC. Commodity codes from your supplier may be correct in their country but slightly different here in the UK.
However, if you choose the right shipping company, mistakes when paying customs tax aren’t something you will need to worry about!
When partnering with Shippo, as part of our shipping process, we will fill out your customs declaration form on your behalf. With our experience, we are familiar with all common mistakes when paying customs tax and have the resources and expertise to avoid them from happening.
Let Shippo Help Pay Customs Tax From China
At Shippo, we make the process of paying customs tax from China easy! It doesn’t have to be a daunting process at all.
When shipping with us, we will do all the nitty gritty paperwork on your behalf and come back to you with exact figures owed to customs, which will be included in your freight invoice. All you are required to do is complete the bank transfer and just like that, your goods will be delivered to you!
If you have any further questions about paying customs tax or are interested in working with Shippo, please feel free to contact us!