Glossary · UK
What is Customs Duty?
A tax charged on goods imported into the UK from outside the UK's customs territory, calculated as a percentage of the goods' value.
Full Definition
Customs duty is a tax charged on goods brought into the UK from outside the UK's customs territory, calculated as a percentage of the customs value of the goods (broadly, the price paid plus certain shipping and insurance costs), with the applicable rate depending on the type of goods, their country of origin, and any trade agreements or preferential tariff arrangements in place between the UK and that country -- goods originating in countries with a UK free trade agreement often qualify for a reduced or zero rate if the correct rules of origin evidence is provided, while goods from countries without such an agreement are charged at the UK's standard "most favoured nation" tariff rates. Customs duty is separate from, and charged in addition to, import VAT, which is applied to the value of the goods plus the customs duty itself, meaning imported goods can attract two different taxes stacked on top of each other before they clear customs. Since the UK left the EU customs union, customs duty and associated paperwork now apply to trade between the UK and the EU in a way they did not previously, which has significantly increased the administrative burden -- and in some cases the direct cost -- of importing and exporting goods for UK businesses and, for higher-value personal purchases from overseas, for individual consumers too. Businesses that import goods regularly can apply various simplifications and reliefs, including deferment accounts that let duty be paid monthly rather than on each individual shipment, and various customs special procedures for goods that are only temporarily in the UK or will be re-exported.