Importing goods into the UK: A guide for businesses

Though it can be complicated, importing goods into the UK is also a great way to boost business growth. Here, we'll break down what you need to know to make it part of a successful strategy.

13 August 2020

The importing of goods into the UK can offer many opportunities and benefits.. Along with providing your business with a competitive edge, it also has the potential to reduce costs and can help improve the range of goods and services you offer to your customers.

With the total GBP value of importing to the UK hovering in the hundreds of billions last year, it’s a worthy opportunity for organisations willing to invest in it. But from the outset, things can seem a little complicated if you aren't familiar with the regulations and legalese that govern the process.

From reducing the costs on your imports to getting the necessary documentation and licenses together, we've created this guide to help you get you up to speed with everything you need to know regarding importing goods to the UK.

Quick links

 

What do I need to start importing goods to the UK?

Before you begin importing goods to the UK, there are a number of steps you'll need to follow. If you go with a third party such as a freight forwarder or customs broker, they may help with some of these tasks, but if not, you'll have to complete them yourself.

 

 

Additionally, there are also processes to follow at the point of origin, such as declaring exported goods to local authorities where your supplier is based. These can vary by location, so specialist advice may be needed once you've chosen a supplier.

At the UK end, however, the things you'll need to do include:

  • Register for an EORI number which shouldn’t take more than three working days to arrive. EORI stands for Economic Operator Registration and Identification; any individual or business involved in importing or exporting within the EU must have an EORI number. You may already have one if your business is VAT registered, but if not, you can apply for an EORI number.

    Note: You'll always need to declare your EORI number when importing from outside the EU.
  • Get the right commodity codes for your goods – these can be found on the Government website. These provide details of the goods you're importing, including what they are, what they're made of, how they're used, and even how they're packaged. Such information is used for tracking imports into the country, as well as to calculate import duty and VAT (more on this later).

You might be fined if you have outstanding duty to pay, and if you’re trying to use the incorrect commodity code to import something restricted or hazardous, you’re liable to prosecution, too.

https://www.istockphoto.com/photo/warehouse-worker-with-a-forklift-in-motion-blur-gm1143020296-306805291

  • Check if you need an import license for your goods, and apply if needed. When importing goods from outside the EU, you'll always need an import license. However, even within the EU, you may also be required to have one if you're moving things like chemicals and medicines.
  • Arrange transport logistics. This is usually done using sea, air or road haulage specialists.
  • Declare your goods to customs. Or, you could have a freight forwarder or customs broker do this for you.
  • Pay any required duty or VAT before your goods will be released by customs authorities.
  • Depending on what you’re importing, you may be able to subsequently reclaim some or all of the VAT paid.

 

What is import duty and how does it affect importing?

If your goods originate from outside the European Union, you'll be required to pay import duty. In most cases, goods imported from within the EU are not liable to import duty, and in this case, they’re formally known as acquisitions instead of imports – which we'll cover in further detail below.

If, however, the goods you’re dealing with originated from outside the EU, but are now in free circulation within the bloc, then duty should have been paid on them at the point that they entered the EU. Thus, they can now be moved with nothing further to pay within Europe.

 

shipping exports

 

Paying VAT on EU acquisitions

Acquisitions must be declared by the business which first imports them into the EU area, if they were imported from outside the EU and then moved within the bloc.

The VAT paid on goods imported from elsewhere in the EU is known as acquisition tax, and is added to your usual VAT return at the same time as when making a purchase from a UK-based supplier, which currently sits at 20 per cent. You can usually reclaim this if the acquisitions relate to any VAT-taxable supplies that you make.

 


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What transportation options do you have for importing goods?

The way you choose to have your goods transported is a major cost. There are several different methods, each with their pros and cons, which are as follows:

Air 

What it's best for: Pros: Cons:
If you have any small, high-value items or things that are urgently required, then air freight is the safest option. Much quicker than moving goods by sea or road Whether you buy a small amount of freight space on a regular flight or charter an entire plane, the costs are typically high.
    Since the cost of import duty to the UK is calculated on the cost of goods + the cost of transportation, and VAT is worked out using the cost of goods + the cost of transportation + the duty paid, the more you pay for transport the higher the duty and VAT costs later.

 

Shipping freighters

Sea

What it's best for: Pros: Cons:
Often used to import consumer goods to the UK from the Far East, sea freight is great for moving large volumes of products around the world. Significantly cheaper than air transport; on average, it can be 4 to 6 times cheaper. Accordingly, the import duty and VAT are reduced too. Can take several weeks for goods to reach their destination.

 

Rail

What it's best for: Pros: Cons:
Rail transport is another sound option for moving large volumes of product. Far more environmentally friendly than other options. Rail lacks the flexibility of transporting by road; you’ll probably need further transport to move goods from the original supplier to a rail depot, then from the depot to your warehouse, which can add complexity and cost.
  Can be more cost-effective in certain areas.  
  European rail services are frequent and quick.  


Road

What it's best for: Pros: Cons:
A popular method of transport, road transport is often used in conjunction with sea freight to move items longer distances at a good price. The strong road networks of Europe make moving large volumes of product easy. While the costs can be reasonable, you'll have to factor in tolls and fuel prices, which can be high.
  Quicker arrival times than sea freight. Longer journeys mean more chance that congestion or other disruptions can create issues.
    Road transport can result in more damage than air freight.

 

Lorry exporting goods

 

How can you reduce costs on importing goods?

As this guide has shown, importing can be a costly process with many elements to factor in. Certainly, some of these charges are inevitable, but there are areas where costs can be cut. As well as opting to go with EU suppliers to save on import duty and VAT costs, you can try the following:

 

Reducing currency exchange costs

When paying your overseas supplier's invoice through a regular bank transfer, you'll incur additional fees and costs, while the exchange rate your bank gives you may not be the best available either.

For international payments, something like TransferWise can be a far cheaper alternative as it provides the real-time, mid-market exchange rate and can be up to eight times cheaper than UK high street banks. Though you do pay a small upfront fee, it's FCA regulated and has over 3 million customers for added peace of mind. Plus, if you're dealing with multiple currencies on a regular basis, then its multi-currency, borderless account won't charge you any fees when receiving money.

 

Opt for reliability over short-term savings

Unreliable shipping services can sometimes lead to missing or late shipments. Though they might seem cheap, you get what you pay for, and their service can lead to huge financial losses for your business, both directly and through damaging your trade relationships.

 

 

It's far better to go for an established, reputable shipping service that has the infrastructure in place to handle large or regular shipments, and that has a proven track record of success in delivering on time.

They should also have a clear, realistic framework of how they'll handle things if something goes wrong, which is essential in ensuring you don't find yourself facing additional costs due to further losses.

 

Look into duty and tax relief

Certain goods fall under the remit of subsidy schemes that offer incentives to importers in the form of reduced taxes and duties. The Government's Trade Tariff look-up tool can help you find out if any duty relief is available on your goods, so it's well worth doing.

 

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