Import VAT (UK)

Import VAT (also known as 'import value-added tax' or 'import duty VAT') is a critical compliance point for any UK business receiving goods from abroad. Post-Brexit, the UK's VAT system changed fundamentally: goods entering the UK are now subject to VAT at the point of import, rather than at the point of sale to the final customer.

T&C Logistics handles international shipments daily, and understanding Import VAT is essential for managing costs, timelines, and regulatory obligations. This glossary entry explains what it is, how it works in practice, and when you'll encounter it.

What is Import VAT (UK)?

Import VAT is the 20% value-added tax applied to the import value of goods entering the United Kingdom. The import value includes:

• The cost of the goods (CIF – cost, insurance, freight).
• Any applicable customs duties or tariffs.
• Handling or clearance fees.

This tax is levied by HM Revenue & Customs (HMRC) under the UK's VAT rules and collected at the point of customs entry. Unlike EU pre-2021 arrangements, there is no longer a simplified import threshold; nearly all goods entering the UK incur Import VAT on import, not on onward sale.

How Import VAT Works in UK Logistics

When goods arrive at a UK port, airport, or international mail centre, a customs declaration must be submitted. This declaration includes the declared value of the goods. HMRC calculates Import VAT based on that value plus any duties owed. Payment is usually required before goods are released—either by the importer, a customs broker, or the carrier acting as an intermediary.

Most UK importers can reclaim Import VAT as input tax, provided they are VAT-registered and the goods are for business purposes. This is done via the VAT return, offsetting the import VAT against output VAT collected from customers. However, non-VAT-registered businesses and B2C (business-to-consumer) sales cannot recover Import VAT, making it a net cost.

T&C Logistics' international shipping partners and NDA-briefed drivers ensure that all customs documentation is accurate and timely, reducing delays at import.

When You Need Import VAT Compliance

Import VAT is required whenever goods cross the UK border from outside the UK customs territory, including:

• EU imports: All goods from EU member states incur Import VAT and customs duties (post-Brexit).
• Non-EU imports: Standard tariff or preferential rates apply under the UK Global Tariff (UKGT) or Free Trade Agreements (FTAs).
• Returns and exchanges: Goods returned to the UK for repair or credit may qualify for VAT relief under specific conditions.
• Low-value imports: Since January 2021, the VAT threshold of £135 no longer applies; all imports are subject to VAT on entry.

To facilitate import clearance, businesses must have an EORI number (Economic Operator Registration and Identification number), which identifies them to UK and EU customs authorities.

Related Terms

• Customs duty: Tariff tax applied to goods, separate from VAT, based on commodity code and origin.
• Customs broker: Licensed intermediary who handles declarations, duty calculation, and VAT payment on behalf of importers.
• CIF (Cost, Insurance, Freight): The invoice value used to calculate import duties and VAT.
• EORI number: Unique identifier required by all importers and exporters for customs clearance.
• Deferred accounting: VAT accounting method allowing businesses to defer VAT payment to the next VAT return, rather than paying at import.

Key UK statistic: The UK postal and courier industry comprises 10,776 companies, and the wider transport & logistics sector generates £17.4 billion annually—making compliance with import VAT a foundational requirement across the supply chain.

"Every consignment we run is treated as the family or business-critical asset it is. Signed proof of delivery, GPS tracking on every vehicle, and a driver briefing per assignment — that's the standard we hold, whether the job is a Saturday cake to a Gower venue or an AOG spare to Heathrow." —Taras, Founder, T&C Logistics