Importing into the UK - A Quick Guide To The Costs Of Buying Overseas

With the rise of eBay, many people are buying items from abroad more frequently and easily than has ever been possible before. Substantial savings can be made over 'official' import prices or goods that are not usually available in the UK can be obtained. This is especially true of exotic electronic good from China. As an example, valve or vacuum tube amplifiers and CD players are very well regarded amongst the Chinese audiophile community - hence there are a large number of designs at very tempting prices for the adventurous UK valve enthusiast.
There are a number of things that should be considered when importing from abroad via eBay:

• How trustworthy the sellers is and their performance in similar sales
• Is there any warranty and how will it be implemented? Do you have to return the item, can it be repaired locally?
• What will it cost in import duty and tax to import this?

There are plenty of guides to interpreting a sellers feedback, and the warranty issue is also a question for the seller, so this article will concentrate on the last of these points. All too frequently, people buy from abroad without being aware of the need to pay import duty and tax, so the courier contacting them with a bill for their new item comes as rather a shock.

Importing from within the EU / EU Harmonised Import Tariff

The EU countries have a common harmonised import tariff - the TARIC. The UK import regulations outlined below are equally valid for all member states of the European Union. Furthermore, if you are importing into the UK from another EU country (or between any two EU countries) there is no duty to pay. The TARIC rates are set every year and published in each country - the UK version consists of 21 sections, 97 chapters and 14,000 sub classifications. As a result, this article can only give broad guidelines and comes with the proviso attached that any information given is for guidance only and should be verified with HMRC (HM Revenue & Customs) before being relied on.

Import Duty and Excise Duty

All goods, both new and used that are imported into the EU from outside the EU are subject to Customs Duty (Import Duty or Import Tax) and VAT (Value Added Tax) according to their value and import tax classification. All goods imported into the UK from outside the EU must be declared to HMRC and in nearly all cases this includes goods bought over the Internet.
There are some tax free allowances that are taken into account before duty is charged. In the case of goods sent from abroad, this is currently £18 (or approximately 22 euros). Items sent as gifts are exempt up to £36 in value. Note that this amount does not include the P & P charges, but only the value of the item. Personal travelers can bring in £145 duty free (there are special considerations for alcohol, tobacco and perfume however).
This is probably a good time for a warning: you will see many sellers on eBay stating that they will send the goods marked as a 'gift' when they clearly are not. This could prove an issue for you as importer, as you are considered responsible for the information on the customs declaration and any charges due. If the customs declaration is false (gift when it isn't, wrong value) - you could be liable for financial penalties or even criminal prosecution. So, don't ask your seller to mark goods falsely and suggest he marks them accurately. They may slip through the net, but the consequences could be nasty if they don't. You have been warned!

Calculating Import Duty

Import duty normally averages between 5% and 9% - it depends on the classification of the item in the package (remember those 14,000 sub classification) and can vary between 0% and 85% - but the 5% - 9% range is typical of what you would be expected to pay on goods bought on eBay.
The duty is paid on the total costs of the item - the cost of the item plus shipping, handling and any shipping insurance. The total, including duty must then have VAT added also. The vat rate varies across EU countries - in the UK it is currently 17.5%.
As an example - an item bought on eBay for £100, with a £15 shipping charge would be liable for duty on £115. If the duty was, say, 5% - the duty to be paid would be £5.75. This would give a total for vat of £120.75. VAT at 17.5% on this would be £21.13 - giving a grand total of £26.88 taxes to pay. Your £100 item delivered in the UK will actually cost you £141.88. In this example, taxes in total amount to just under 27%. A good rule of thumb to apply is to take the item cost and add 30% to give you a ball park figure for a total cost of the item. Watch that this is not skewed by sellers inflating the postage charges to a large degree - in this case you'd be better off carrying out the rough full calculation to work out the likely total costs. Obviously any calculation will not be accurate until you know the actual duty percentage you will have to pay.
Note that usually the goods will not be released to you until you have paid the duty & vat involved - your courier will handle this in most cases.

Administration Fees

Most couriers will charge an administration fee for dealing with the duty and VAT issues on your behalf. This varies from courier to courier - the Royal Mail currently charges £4, Parcel force £8 an item (or £13.50 on high value items) and DHL £10 (for businesses), £1.25 (for private individuals) or 2% of the value whichever is higher.

Summary

Don't let all this scare you and put you off buying that item you really want from abroad - but be aware that there is much more to pay than just the item and shipping costs - factor that in and you will be able to make an informed decision on whether the item is such a bargain after all!