Quick answer: Yes, most goods imported into the UK are subject to some form of tax. This typically includes import VAT (usually 20%), customs duty (on goods over £135), and excise duty for alcohol and tobacco. EU goods are no longer exempt since Brexit took effect on 1 January 2021.
Key Takeaways
- VAT applies to almost all imported goods — standard rate is 20%
- Customs duty kicks in on non-excise goods worth more than £135
- EU goods are no longer VAT-free — Brexit changed everything from January 2021
- Excise duty applies to alcohol and tobacco, regardless of value
- Some goods — like most food, children's clothing, and books — are zero-rated for VAT
- Gifts under £39 are exempt from VAT; gifts under £135 are exempt from customs duty
- Businesses can use postponed VAT accounting to avoid upfront import VAT payments
According to HMRC Customs Administrative Burden Research in 2023, roughly 70% of small business owners in the UK admit they're unsure about their customs obligations when buying goods from abroad. If you're one of them, that uncertainty could be costing you money, or worse, landing you with unexpected bills from HMRC.
Ordering from a supplier in Germany? Importing stock from the US? Buying products through an EU marketplace? Every single one of those transactions could trigger a UK tax obligation. And since Brexit, the rules that once felt familiar have shifted in ways that still catch businesses off guard.
This guide breaks it all down. No jargon, no guesswork, just a clear explanation of what you owe, when you owe it, and how to pay it correctly.
How Much Tax Do You Pay on Imported Goods?
The amount of tax you pay on imported goods depends on three factors: the type of goods, their value, and where they're coming from.
Here's a straightforward breakdown:
| Tax Type | When It Applies | Rate |
| Import VAT | Almost all goods imported into the UK | 20% (standard), 5% (reduced), 0% (zero-rated) |
| Customs Duty | Non-excise goods worth over £135 | 0%–25% depending on commodity code and country of origin |
| Excise Duty | Alcohol and tobacco — any value | Varies by product type and strength |
| Anti-Dumping Duty | Goods deliberately underpriced vs UK market | Up to 50% |
For most goods over £135, you'll pay both customs duty and import VAT. VAT is calculated on the full customs value — that's the cost of the goods plus shipping, insurance, and any duty already owed. So yes, you're paying VAT on top of duty. That's not a mistake; that's how it works.
For goods under £135, sellers are typically responsible for charging and collecting UK VAT at the point of sale. In practice, though — particularly with smaller overseas sellers — this doesn't always happen, and HMRC has limited enforcement reach over foreign businesses.
How Do I Know If I Have to Pay Import Duties?
The key trigger is value and category.
You'll owe customs duty if your goods are:
- Worth more than £135 (based on the total consignment value, including postage and insurance), or
- Excise goods (alcohol, tobacco, or fragrances) at any value
To find the exact duty rate for your product, you need to look up its commodity code on the UK Trade Tariff. This is the official HMRC tool that tells you the applicable rate based on what the product is and where it originates. Different rates apply to different countries — some goods from certain countries attract 0% under preferential trade agreements.
If you're unsure of your product's commodity code, it's worth contacting HMRC directly or speaking to a customs broker. Getting this wrong is one of the most common (and costly) import mistakes businesses make.
Gov.uk states that "You’ll be contacted by Royal Mail, Parcelforce or the courier company if you need to pay any VAT, duty or delivery charges to receive your goods. They’ll send you a bill stating exactly which fees you need to pay. They’ll normally hold your parcel for about 3 weeks"
What Items Are Exempt from UK Import Tax?
"Exempt" covers a few different things here, so it's worth being precise.
Zero-Rated for VAT (Tax-Exempt on Import VAT)
Under UK VAT rules, the following categories are zero-rated, meaning no import VAT is charged:
- Most food and drink (excluding alcohol, confectionery, crisps, and some sports drinks)
- Children's clothing and footwear
- Books, newspapers, and magazines
- Prescription medicines
- Some medical devices and equipment
Zero-rated is not the same as VAT-exempt. The goods still need to appear on a VAT return, they just carry a 0% rate.
Exempt from Customs Duty
Goods worth £135 or less (non-excise) are not subject to customs duty. Gifts valued between £135 and £630 incur a reduced 2.5% customs duty rate.
What Items Are Exempt from Import Duty?
Import duty exemptions depend heavily on origin and trade agreements.
Approximately 90% of goods arriving from the EU qualify for 0% customs duty under the UK–EU Trade and Cooperation Agreement. However, this only applies if the goods originate in the EU, not just if they were shipped from an EU country. A product manufactured in China and sold through a German retailer does not automatically qualify for the 0% rate.
Beyond the EU deal, the UK has signed trade agreements with a range of countries — including Japan, Canada, and South Korea — which can reduce or eliminate duty on qualifying goods. You'll need to confirm the rules of origin requirements to claim these preferential rates.
Do I Have to Pay VAT on Goods from the EU?
Yes, since 1 January 2021, VAT applies to goods from the EU in the same way it does for goods from any other country outside the UK.
This is one of the most significant post-Brexit changes for UK businesses. Before Brexit, buying from EU suppliers meant no additional VAT at the border. That's no longer the case.
Here's how it now works for EU imports:
| Goods Value | VAT Treatment |
| £135 or less | Seller should charge and collect UK VAT at point of sale |
| Over £135 | Import VAT collected at the UK border by HMRC or your courier |
One problem that comes up regularly: paying VAT twice. If an EU supplier charges local VAT on an export (which they shouldn't — exports are VAT-free in the EU), and then UK import VAT is also charged on arrival, you've effectively paid twice. You're entitled to a refund from the EU supplier in that scenario. Keep your records and raise it directly with them.
How to Pay VAT on Imported Goods
There are several ways to pay VAT on imported goods in the UK:
1. At the point of sale
For goods under £135, the overseas seller should collect UK VAT when you check out. This is the simplest method — you pay it upfront as part of the purchase price.
2. At the border (via your courier or Royal Mail)
For goods over £135, import VAT is collected when the shipment arrives in the UK. Your courier — whether that's Royal Mail, Parcelforce, DHL, or FedEx — will notify you of the amount due and typically hold the parcel until payment is made. Royal Mail and Parcelforce usually hold parcels for around three weeks. Miss that window, and the parcel gets returned.
3. Postponed VAT Accounting (PVA)
This is the option most VAT-registered businesses should be using. Introduced by HMRC in January 2021, Postponed VAT Accounting allows you to defer import VAT and account for it on your VAT return rather than paying it upfront at the border. The practical effect? A net-zero impact on your cash flow — you account for it in Box 1 (as output tax) and reclaim it in Box 4 (as input tax) on the same return.
To use PVA, you need to declare it on your customs declaration. Each month, HMRC provides a Postponed Import VAT Statement showing all the VAT you've deferred. If you can't access your statement in time, HMRC allows you to estimate — but you must reconcile the figures once the statement arrives.
4. Duty Deferment Account
If you import frequently, a duty deferment account lets you make one consolidated monthly payment to HMRC covering customs duty, excise duty, and import VAT across multiple shipments. You'll need to register for this separately through HMRC's Customs Declaration Service.
TL;DR, Do I have to pay tax on imported goods?
- Import VAT (20%) applies to almost all goods coming into the UK
- Customs duty applies to non-excise goods worth over £135
- EU goods are no longer VAT-free post-Brexit — the rules changed in January 2021
- Excise duty applies to alcohol and tobacco at any value
- You can avoid upfront import VAT payments by using Postponed VAT Accounting
- Zero-rated goods (food, children's clothing, books) carry 0% VAT on import
- Use the UK Trade Tariff to find your product's duty rate
Confused About Import Taxes & VAT? Debitam Can Help
Getting import VAT wrong isn't just inconvenient; it can trigger HMRC penalties, disrupt your cash flow, and create a paper trail you really don't want. At Debitam, we've helped hundreds of UK businesses get their import VAT reporting right, from first-time importers to established businesses navigating post-Brexit complexity.
VAT is a Debitam speciality, with over 26,000 trusted businesses across the UK and 4.8, excellent rated on Trustpilot, we have been helping out UK businesses to navigate tax and VAT on imported good post-Brexit for over 8 years.
Whether you need help setting up Postponed VAT Accounting, reconciling your monthly statements, or simply understanding what you owe and when, our team knows HMRC's systems inside out.
Don't leave it to guesswork. Get in touch with Debitam today and let's sort it together.
Frequently Asked Questions
Do I have to pay tax on imported goods in the UK?
Yes. Most goods imported into the UK are subject to import VAT at 20%, and goods worth more than £135 also attract customs duty. Excise goods like alcohol and tobacco carry additional excise duty at any value, regardless of what you paid.
Do I have to pay VAT on goods from the EU?
Yes. Since 1 January 2021, VAT applies to EU goods in the same way it applies to goods from any non-UK country. Goods under £135 should have UK VAT collected by the seller; goods over £135 have import VAT collected at the UK border.
What is the VAT rate on imported goods?
The standard UK VAT rate on imported goods is 20%. A reduced rate of 5% applies to certain items such as health products, children's car seats, and domestic fuel. Zero-rating (0%) applies to most food, children's clothing, and books.
Can I avoid paying VAT twice on EU imports?
If an EU supplier charges local VAT on goods they're exporting to the UK, and you then pay UK import VAT on arrival, you've been charged twice. You're entitled to request a refund of the EU VAT from your supplier, exports from the EU should be zero-rated for VAT on their side.
What is the £135 customs duty threshold?
Goods sent to the UK with a value of £135 or less (excluding excise goods) are exempt from customs duty. This threshold is based on the value of the goods only, not including postage, packaging, or insurance. Note that VAT still applies even below £135.
How do I pay VAT on imported goods in the UK?
There are four main methods: paying at the point of sale (for goods under £135), paying your courier or Royal Mail before collection (for goods over £135), using Postponed VAT Accounting on your VAT return (for VAT-registered businesses), or using a Duty Deferment Account for regular importers.
What goods are exempt from UK customs duty?
Goods worth £135 or less (excluding excise goods) are exempt from customs duty. Additionally, approximately 90% of EU-origin goods qualify for 0% duty under the UK–EU Trade and Cooperation Agreement, provided they genuinely originate in the EU. Various other trade agreements may also reduce duty to 0% depending on the country of origin.
What are the import costs from the USA to the UK?
Goods from the USA are treated the same as any non-UK imports. Customs duty applies on goods over £135, with rates varying by commodity code. Import VAT at 20% applies to all goods. Shipping costs from the USA are typically included in the customs value on which both duty and VAT are calculated, so factor these in when estimating your total import costs.
