What Is Import Duty?
Import duty is a tax charged on goods brought into a country. Understanding how it's calculated is essential for any importer.
Key Takeaways
- Import duty is a percentage of the customs value of goods, charged when they enter a country.
- In the UK, duty is applied to CIF value (Cost + Insurance + Freight).
- Duty rates range from 0% to 12%+ depending on HS code and country of origin.
How import duty works
Import duty is a government tax on goods entering a country. In the UK, it is calculated as a percentage of the customs value — typically the CIF value (Cost of goods plus Insurance plus Freight to the UK border). A product with a £5,000 CIF value and a 12% duty rate incurs £600 in import duty.
Duty rates vary widely
UK duty rates under the Global Tariff range from 0% (most electronics, many raw materials) to 12%+ (some clothing and footwear, agricultural products). The exact rate depends on the product's HS code. Consumer goods from China — a common sourcing country — often attract higher rates than goods from countries with UK Free Trade Agreements.
FTAs and preferential rates
The UK has Free Trade Agreements with 70+ countries, providing zero or reduced duty rates on qualifying goods. To claim a preferential rate, goods must meet the Rules of Origin requirements — they must genuinely originate from the FTA country, not simply pass through it. Your supplier should provide a certificate of origin to support the claim.
VAT on import
UK importers also pay Import VAT at 20% on the CIF value plus duty. Most VAT-registered businesses can reclaim this on their next VAT return, but it represents a cash flow cost between the date of import and the date of VAT recovery. Non-VAT-registered importers cannot reclaim it, making it a true cost.