Become an online importer and save cash – but beware hidden costs Purchasing from online sites overseas can be a great way to save money or buy tech kit that isn’t available in the UK. But it can also be fraught with import duty and VAT complications. But this really needn’t be the case. There are great deals to be had for anyone prepared to navigate around the financial issues.

In the last two weeks I’ve bought a CD from a site in Hong Kong (50 per cent less than UK price), an electronic kit to make a USB charger from New York (not available in UK) and a Wii Fit from France (parity price with UK once shipping is added but good availability).

This post is a bid to share what I’ve learnt from ten years shopping overseas online.

As soon as you hit purchase from a web site that is based outside the UK you become an importer. This premise also applies if you are buying from oversees sellers on sites such as Amazon and eBay.

Within the European Union (EU) this isn’t usually an issue. Import duty doesn’t apply unless the product is subject to excise duty, such as alcohol or cigarettes.

It’s importing from outside the EU where it gets complicated, and where both import duty and VAT apply. Clear information is hard to come by: I always head to DHL’s UK web site. HM Revenue & Customers (HMRC) also has a good online guide on import procedures and a Guide to buying overseas on the internet.

Import duty is a tax charged on goods with a value of £18 or more produced, outside the EU, but it is only charged when the taxable amount is more than £7. The duty is controlled by HMRC and is intended to keep trade fair by equalising the cost of goods produced within the EU with those produced outside. VAT is also added onto the cost imports for the same reason.

Import duty and VAT aside it is still worth buying from web sites outside the EU as you can make substantial savings and buy products that aren’t otherwise available in the UK.
The rate of import duty depends on the country of origin and the type of product. Rates are published annually in the Integrated Tariff of the United Kingdom. It consists of three huge volumes and details everything you could possibly want to know about import and export.

BusinessLink has a free online version containing all of the 16,000 or so tariff charges. Use this if you are trying to work out the cost of import duty or call either the HMRC Tariff Classification Service Enquiry Line on 01702 366 077 or the HMRC National Advice Service Enquiry Line on 0845 010 9000.

Tariff charges typically range between zero and nine per cent of the value of the good being imported, but check the Business Link site for accurate information. And remember you will only be charged customs duty if the amount of duty is more than £7. VAT is charged at 17.5 per cent on top of the value of the goods, transport costs and customs duty.

Costs are paid to HRMC at the point of entry into the UK based on a customs declaration fixed to package by the exporter. Consumer purchases are typically handled by the carrier such as DHL or the Post Office and passed on directly to the consumer.

There are plenty of businesses in the UK whose business model is based on spotting opportunities for arbitrage on imported goods. Some companies are wise to this, and seeing it as a threat to their business, refuse to ship overseas. While I’m not suggesting that everyone start an import business, it demonstrates the opportunity for cost savings.

Tags: import, online shopping, overseas, tax   Permalink |