import-duties-from-china-to-uk

Are you aware on the import duties from China to UK?

Are you thinking of importing products from China to UK?

The United Kingdom has strict implementations on its importation process. It is best to understand importing regulations and how it limits some products to cross the borders.

It is helpful in knowing the import tariffs, product classification, and relevant import tax from China to UK if you are importing from China to UK. Wrong calculations or improper documentation can lead to big loss for your businesses.

You should know the different types of duties, how they are calculated, how to pay them. This will also help you to calculate the exact landed cost of your products in the UK.

This blog will discuss the following key points related to Import Duties from China to UK.

  • Documentations need to prepare for importing from China
  • Tax and Duties structure and how to pay the taxes
  • Quality Compliance Standards on Import Duties from China to UK

Table of Content

Chapter 1:  Things to Prepare before Importing from China to UK

Chapter 2: Tax and Duties when Importing From China to UK

Chapter 3: Quality Compliance Standards when Importing from China to UK

Chapter 4: Penalties on Avoiding Paying Tax Legally in the UK

 Chapter 5: FAQs About Import Duties from China to UK

Chapter 1:  Things to Prepare before Importing from China to the UK

1. Secure an EORI Number (Economic Operator Registration)

Economic Operator Registration or EORI number serves as a recording system for Exported and imported products in the UK. Any EU business is legally mandated to have an EORI number.

secure-an-eori-number

Suppose there is a need for you to file an electronic export declaration for a commercial invoice. In that case, you need to use the CHIEF system.

You need an EORI number when you use a freight forwarder. Application for EORI number is available online and can be completed in three days to receive your assigned Number.

2. Secure import license to import products from China to the UK

import-license-to-import-goods

Before doing any import business, you must acquire an import license. It is not necessary for most of the goods but it is required for others. It will be better for you to get one in case you are importing something that requires a license. Some of these goods are:

  • Military products
  • Firearms
  • Certain goods subject to import sanctions

Apply for an import license before importing goods from China, especially if the products are under the surveillance control category. You can visit the Department of International Trade website to check if you need a license and how to obtain one.

3.  Check if the goods from China you are importing are not banned in the UK

Some products are subject to import duty from China to UK restrictions. It is essential to ensure that all the import restrictions don’t apply to your products. Right now, there are three forms of control: Surveillance, Bans, and Quotas.

banned-products

Importing with licenses is monitored through surveillance, so that should not be an issue once you get the license. However, there is no import allowed of the products which come under bans and quotas control lists. These products include:

  • Controlled drugs
  • Offensive weapons
  • Self-defense sprays
  • Endangered animal and plant species
  • Rough diamonds
  • Indecent and obscene materials
  • Personal imports of meat and dairy products from non-EU countries.

4.  Register your goods with the CHIEF system (Customs Handling of Import and Export Freight)

Exporters, importers, and freight forwarders use the CHIEF system to enter customer data, detect errors, and pay taxes and duties electronically. The system recognizes consignments that need paperwork. It reduces the time to process the entry of low-risk products.

commodity-codes-when-import-duties-from-china-to-uk

In order to register your products with the system, you need to fill a form that requires the following details:

  • Your contact details
  • Your EORI number
  • The Community System Provider you will use
  • The badge allocated by the Community System Provider
  • The port or location where your products will travel through
  • The Entry Processing Unit (EPU) number.

5.  Check the commodity codes and use the right one for your products

If you want to search for the right commodity code, VAT, and duty rates, you can go to the UK Government Trade Tariff. Commodity codes are important for categorizing your imported products so that you can have the following:

  • Full declarations and other documentation
  • Check to see if any duty exemptions are available
  • Determine if you must pay some VAT or duty fees

6.  Pay the Required VAT Fee when Importing from China to the UK

You must pay both the VAT and the total sum of import UK duty and customs charges from China to the UK. The customs value equals the price of the total costs of the goods shipped from China to the UK, as well as the associated production costs.

pay-the-required-vta-fee-when-importing-from-china-to-uk

Just be reminded to pay any VAT fee which is due. You are entitled to claim it back through VAT return if you are VAT registered.

7.  Secure a POA (Power of Attorney) and CR (Customs Registration)

You need to secure a CR number, including the POA for non-documented goods, regardless of their value.

In China, both importers and exporters must register with customs. In order to clear customs, you can get either an importer or exporter CR number which has to be detailed in your commercial invoice.

If you want an easy import from China to the UK, use a reliable freight forwarder who can advise you on what you need to know about customs limits of imported goods.

Chapter 2: Tax and Duties when Importing From China to the UK

tax-and-duties-when-importing-from-china-to-uk

1.    VAT in the UK

A value-added tax or VAT is applied to all items when you import from China to the UK. There is an exemption from gifts worth £39 or less which is delivered from outside the UK and the EU.

You must pay VAT when you purchase or collect the products before you receive the items. The total package value is calculated with VAT, which includes:

  • UK duty you owe
  • Post packaging
  • Insurance
  • Value of the goods
  • Goods worth 39 pounds or less in total

If you buy items yourself, the seller will include the VAT in the total purchase. This does not apply to excise goods. For that, you would only pay the VAT for excise goods and gifts sent by someone if it amounts to more than 39 pounds.

  • Good worth more than 135 pounds in total

You need to pay the VAT before you receive your goods or upon receiving them via courier service for items amounting to more than 135 pounds in total.

2.   Customs Duty in the UK

You will pay for Customs Duty from China to the UK for products that are excise goods or worth more than 135 pounds in total. You will pay both the price for the items and total costs for postage, packaging, and insurance.

3.  How to calculate the Import Tax from China to the UK?

how-to-calculate-the-import-tax-from-china-to-uk

You need to be able to calculate the import tax if you’re importing from China to the UK.

  • Examples to calculate import tax

Check the examples below on how to calculate the costs of UK duty and taxes when you import from China.

-Example 1: Cost of VAT and Duty when Shipping and Insurance Cost is included.

The examples below are commonly used for the cost of shipping and insurance, which can have a higher cost for two sample computations:

Value of goods2000 pounds
Cost of insurance/shipping200 pounds
Sub Total 12,200 pounds
Duty on Sub Total 1 @3.5%77 pounds
Subtotal 22,277 pounds
VAT @20% on subtotal 2 455.4 pounds
Total landed cost including VAT and duty 2, 732.4 pounds

-Example 2: Free on Board (FOB)

free-on-board

The calculation does not include the cost of insurance and shipping when calculating the duty and taxes.

Value of goods 2000 pounds
Cost of insurance/shipping200 pounds
Sub Total12,000 pounds
Duty on Sub Total 1 @3.5%70 pounds
Subtotal 22,070 pounds
VAT @20% on subtotal 2414 pounds
total landed cost including VAT and duty2,484 pounds
  • Imports and Exports General Inquiries

For further inquiries on imports and exports, you can send them online. You can also use HMRC’s (Her Majesty’s Revenue and Customs) digital assistant to look for information on imports, exports, and EORI. There is also a Webchat to speak to someone online about your inquiries.

You can also reach out on their telephone numbers listed under their contact info. They are open from Monday to Friday from 8 am to 10 pm, and on Saturday and Sunday, from 8 am to 4 pm.

4. How to Pay your UK duty and VAT tax

Don’t worry about how you are going to pay the duties and VAT you owe to HMRC. Regardless of how you import the duty of your goods from China, the company that handles the customs clearance will contact you.

You will get instructions and clarification on the amount you owe and the best payment method.

When importing smaller packages or samples through the post or courier, it’s the same thing. You will be charged for the total cost of shipping at the time of purchasing the order.

You will receive a notification from Royal Mail, Parcel, FedEx, etc. when you settle the import tax from China to the UK. Typically, items remain in storage for three weeks before returning to the sender once the payment of duty is made.

5.  Calculate UK duties from this calculator

calculate-import-duties-taxes-uk

Since most of the shipments are subject to taxes, you can calculate UK duty and taxes from this calculator on the website (simply duty). It is already simplified to calculate and estimate the UK duty and VAT.

6.  Duty and VAT on sample products

There are several factors to consider when estimating the duty and VAT on sample products. There are duty costs you need to pay when importing from United States, Taiwan, India, or China. In some cases, VAT and duty relief are granted on other sample items if you meet the following conditions:

  • Gaining orders for the commercial product they represent
  • A negligible value less 39 pounds is exempted from duties and taxes
  • Used as sample products once goods from China is imported

7.  What is Anti-Dumping Duty in the UK?

There are goods that are ‘dumped’ in the United Kingdom and they are levied for anti-dumping duties. When foreign exporters trade products overseas at lower cost than their domestic market cost, dumping duties come into place.

This is to offload the stocks faster through exporting. However, it may have a negative impact on the importing country’s domestic markets if this is not properly regulated.

The European Union imposes anti-dumping duties for countervail imported items that may cause damage to the United Kingdom industry. This is why the duty increases the price of importing specific items from China.

Anti-dumping duties can be exceedingly high, with estimates levied that exceed 50% of the cargo’s value. Anti-dumping duties have been placed on products imported from China, such as motorcycles, e-bikes, solar panels, and ceramic tableware and tiles.

These are just a few of the goods from China on which the EU has implemented this program. HMRC has compiled a list of the most recently implemented anti-dumping duty initiatives.

8.  Duty Reduction with the GSP Scheme in the UK

It is important for your business to save money, as much as you would benefit from importing products abroad. You can take this great opportunity with the GSP scheme.

vat-rates

The GSP (Generalized System of Preferences) scheme enables imported products for specific countries to be duty-free or have reduced rates. It is an EU directive which put in place for developing countries to trade on a larger scale globally.

Although this is a little bit complicated, it is an excellent way for UK importers to reduce their purchasing costs and raise their margins.

If you know the opportunities offered by the GSP scheme when sourcing goods from China and suppliers, you can be able to save enough money and take lead among your competitors.

  • Check the list of countries entitled to GSP preferences:
CountryCountryCountry
VietnamPhilippinesIndonesia
UzbekistanNigeriaIndia
SwazilandNamibiaGhana
SyrianKenyaFiji
Sri LankaIraqCote d’Ivoire, Congo, Cameroon
  • Here are the countries you can expect reductions from:
CountryCountryCountry
PeruNepalGeorgia
ParaguayMyanmarEl Salvador
PanamaMongoliaEcuador
PakistanGuatemala, CambodiaCosta Rica, Bolivia

Chapter 3: Quality Compliance Standards when Importing from China to the UK

1. British Product Safety Regulation when Importing from China to the United Kingdom

certifications-to-import-duties-from-china-to-uk

The General Product Safety Regulations (GPSR) of 2005 would require all items to be secure in their reasonably foreseeable use. There is an authority given to regulatory agencies to take action when this requirement is not met. There are mandatory standards which are summarized below:

  •  REACH

REACH regulates the use of chemicals in all consumer products sold in the United Kingdom and the rest of the EU. Products that are REACH-compliant include, but are not limited to, the following:

  • Product packaging
  • Furniture
  • Electronics
  • Toys
  • Clothing and textiles

It is not necessary for importers to keep track of which substances are restricted (new chemicals are added regularly). In addition, when dealing with suppliers and testing companies, simply mention “REACH.”

Despite the fact that REACH enforcement is always required, third-party testing is not always mandatory. In contrast, a non-compliant product must be removed from the market. Send batch samples to a laboratory to ensure that the product is in compliance.

  •  CE Directives

CE-Made-In-China-Label

Since 1985, European products sold in the EEA have been labeled with the Conformité Européenne (CE).

Items with the EU New Approach logo have been certified to comply with EU directives. These regulations apply not only to goods manufactured in the EU but also to products sold within the EEA.

Many product categories sold in the UK need CE marking, including, but not limited to, the following:

  • Construction products
  • Electronics
  • Medical devices
  • Toys
  • machines

One or more CE labeling directives can apply to a single product. Consider a Bluetooth speaker that must meet the following specifications:

  • Risk assessment
  • Test reports (although third party testing is normally not mandatory)
  • Product photos, design drawings, and BoM (Bill of Material)
  • Declaration of Conformity
  • List of applicable directives and standard
  • RoHS

RoHS

RoHS restricts the use of heavy metals such as cadmium and lead in electrical components and solder. Compliance is expected when importing electronics into the United Kingdom and all other EU member states.

  •  EN71

Compliance is expected for all toys, and industry experts often recommend it for all children’s products. EN 71 is a toy safety directive. It is a requirement of the “CE labeling directives.”

EN 71 is divided into more than ten subparts and addresses both chemical constraints and physical properties (i.e., seams and sharp corners).

2. British Labelling Requirements when Importing from China to the UK

  •  CE Marking

Both the product and its packaging must bear the CE logo. CE labeling is necessary for goods that fall under one or more EU product directives, as mentioned earlier in this article.

ce-marking

  •  WEEE Marking

Electronics require WEEE labeling, which must be applied to the product packaging. The symbol suggests that the commodity should not be discarded as unsorted waste, but rather guided to separate processing facilities for recovery and recycling.

  •  Textiles Labelling

When importing textiles from China to the United Kingdom, the following garment labeling requirements must be met:

  • Language
  • Care instructions
  • Fiber composition.

Chapter 4: Penalties on Avoiding Paying Tax Legally in the UK

penalties-on-avoiding-paying-tax-legally-in-the-uk

Tax evasion can result in significant fines and imprisonment, depending on the circumstances. Tax evasion penalties and average sentences can differ. The following are some examples of sanctions that can be imposed:

1. Presenting false document to HMRC

HMRC is the responsible body in the UK for the collection of taxes, including excise duties and VAT. The information required includes all income details, imports, and tax returns.

If you fail to give the correct information, you can face criminal charges. For example, tax evasion fines can vary from a fine of up to £20,000 to up to 6 months in jail in a magistrates’ court or as a summary conviction.

2. Evasion of taxes and duty (smuggling)

If you are found guilty of tax evasion, you will face criminal charges; HMRC tax fraud fines range from £20,000 to 6 months in prison in a magistrates’ court or as a summary conviction. It can also go up to 7 years in prison with an unlimited fine, depending on the severity.

evasion-of-taxes-and-duty

And smuggling can bring another range of issues like:

  • Tax fraud
  • Diversion fraud
  • Excise fraud
  • The importation of prohibited goods
  • Illegal manufacture of excise goods
  • Contravention of customs law
  • VAT, Invoice, and Payment Fraud.

The penalty can be very severe depending on several factors like purpose and scale of smuggling.

3. Using Stolen Public Funds to pay for Imports

As an importer, acquiring funds for payment of imported goods and all the taxes can be tough. Always use legal methods of payment like taking a loan out of banks if you are unable to spend from your savings. If, for example, you use stolen public funds to pay for your imports, it will be a big offense.

Because of the gravity of the offense, the maximum punishment in the United Kingdom for stealing public funds is life in prison or an unlimited fine. It depends on how much is stolen, for what purpose, and where it is utilized.

4. Income tax evasion penalties

As an importer, the reselling of imported goods makes up most of your income. So income tax needs to be paid in full amount as well. You must report your income accurately, and if false information is given, the offense of income tax evasion carries a severe penalty.

A summary conviction carries a 6-month prison sentence or a fine of up to £5,000 in fines. In the United Kingdom, the maximum punishment for income tax evasion is seven years in prison or an unlimited fine.

5. Evasion of VAT when importing in the UK

VAT makes up a good portion of the import taxes that you have to pay. Any fraud like reporting incorrect information to the tax collection department, hiding your total imports, misleading the customs department can have severe consequences.

For example, the maximum punishment in a magistrate’s court is 6 months in prison or a fine of up to £20,000. Offenses in Crown Court will result in up to seven years in prison or an unlimited fine.

 Chapter 5: FAQs About Import Duties from China to the UK

faqs-about-import-duites-from-china-to-uk

1. What do I do after finalizing the goods from China I want to import to the UK?

After you confirmed the goods from China you want to import, check out the first chapter of this article on the things to prepare before importing such as the following:

  • Secure an EORI number
  • Secure license if necessary
  • Check the goods not banned in the UK
  • Register goods with the CHIEF system
  • Check the comedy codes
  • Pay the required VAT fee
  • Secure a POA and CR

2. Can I avoid import duty tax from China to the UK?

Tax evasion is described as a person or company intentionally subverting the tax system and is a crime. Tax avoidance is defined as using the law to your advantage and structuring your finances in a way that decreases your tax liability but is arguably legal.

Tax evasion usually carries a harsh maximum sentence of seven years in prison or an unlimited fine, and it is rarely taken lightly.

3. Are there duty and tax charges on samples?

If you incur a fee on a shipment containing samples, that is because the samples did not meet HMRC’s commercial sample requirements.

Suppliers sometimes send sample products so that you can order in bulk once you have inspected the samples. Make sure to ask the supplier to label it as Gifts. If the cost of the sample is less than 39 pounds, it will be exempted from Duty and Tax.

4. How do I make sure that I pay the right VAT amount?

The VAT is charged as a percentage of the amount declared to customs. If you’re unsure how to pay the duty and value-added tax (VAT) you owe to HM Revenue, you don’t have to worry about it. You can refer to a customs agent who will help you to calculate the right amount of VAT for your imports into the UK.

5. How much is the import fees from China to the UK- Is the freight cost subject to VAT?

Yes. In Europe, the customs charges from China to the UK value also cover all international shipping costs from the port of importation to the final destination.

Any logistics costs incurred within the EU, such as unloading and customs clearance, are not to be included in the customs value. However, the forwarder will also have VAT on the invoice, which must be charged separately.

Conclusion

We hope this article has helped you understand the import fees and taxes you must pay when importing goods from China to the United Kingdom. Remember that paying relevant taxes while importing is important so that you can ship your products with ease and for smooth transactions.

Although the process seems complicated and confusing, selecting a reputable sourcing agent or customs agent will help to simplify it.

You can also hire an expert sourcing company to guide you on shipping your goods from China to the UK. EJET Sourcing has years of expertise and experience in handling sourcing products and delivery worldwide. Let us know if we can help you to import products from China to the UK.