Import VAT - What is import VAT?
Import VAT is a tax paid on goods purchased from another country outside the UK.
The opposite of importing? Exporting. Check whether you should pay export VAT on any goods or services sold to customers abroad.
Import VAT is only applicable to goods coming from countries outside of the UK. After Brexit, import VAT is also applicable to goods entering Great Britain (England, Scotland and Wales) from EU countries.
It’s important to note that Northern Ireland is still part of the EU single market. Therefore, goods entering Northern Ireland from the European Union will not incur import VAT.
Import VAT is applied to all purchased goods worth more than £135 (excluding excise goods) and all gifts worth more than £39.
The VAT rate you’re charged on imported goods depends on whether your business is VAT registered.
If your business is registered for VAT in the UK, you’ll pay VAT at the same rate that would typically apply when you purchase goods from within the UK – normally 20%. The import VAT is paid on the total amount determined for the shipment: the value of the goods, the shipping & handling costs, as well as any duties or levies that can be applied.
Import VAT can be paid either on arrival or on your VAT Return using the postponed VAT accounting scheme.
Your VAT Return must be completed in sterling, so if you paid for goods in another currency, you must convert this into GBP, based on the exchange rate at the time of purchase.
For tax on services sourced from countries outside the UK, there are a number of steps that should be followed.
If you’re purchasing services from outside the UK, you should follow a procedure called reverse charge, also known as ‘tax shift’.
This is when you credit your VAT account as if you had supplied the services yourself, then deduct the same amount – the two cancel out, meaning you don’t pay VAT.