Import VAT

What is VAT?

VAT stands for Value Added Tax. It is mostly charged on the supply of goods and services provided by a UK VAT registered business. However, it can be charged on imports from outside the UK. In transactions made between two VAT registered companies, the buyer can usually claim back the VAT paid.


Find out more information about UK VAT, including who charges VAT? And what VAT is charged on?


hmrc vat calculator pen

What is Import VAT?

Import VAT is a tax charged on imported goods. This includes:

  • Goods shipped direct to the UK from outside the E.U., including those that undergo free circulation in the UK.
  • Goods that are suspended by customs, due to Notice 702/9 of the import customs procedures, including those

          that undergo free circulation in the UK.


Please note: Free circulation is when goods are cleared through import customs anywhere within the E.U.


When are goods exempt from Import VAT?

There are two instances in which goods become exempt from Import VAT, these include:

  • Goods that are shipped to the UK from other E.U. countries, unless imported from an E.U. special territory.
  • Goods, which are imported from outside the E.U. as part of your duty free allowances are also exempt from VAT.


Please note: E.U. special territories include: The Aland Islands (Finland), The Canary Islands (Spain), The Channel Islands (UK), The French Overseas Departments of Guadeloupe, French Guiana, Martinique and Reunion and Mount Athos also known as Agion Oros (Greece).


There are also some goods, which are automatically exempt from import VAT. These include:

  • Food stuffs
  • Medicine
  • Children’s clothing
  • Books
  • Certain types of personal effects e.g. when moving home


Import VAT rate

The Import VAT rate is charged at the same percent that applies to similar UK goods. It is calculated based on the total value of the imported goods in pounds sterling. However, on goods from outside the E.U. the VAT rate is calculated based on the Customs Declaration. This is inclusive of value of the goods, the transport costs, the postage and packaging, insurance costs and any payable duty.


The 3-step formula, is as follows:

import VAT rate formula 

The VAT rate is dependent upon the goods/services being imported. Three different rates apply:

  • Standard rate – 20%
  • Reduced rate – 5%
  • Zero rate – 0%


However, some services/goods are exempt from VAT or outside the system altogether. Different circumstances arise with gifts.

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Import VAT

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