Accounts and Payments

How do you calculate Customs Duties and Taxes on an import into the UK?

Customs Duty is a tax charged on all products shipped from outside of the EU. Controlled by HM Revenue and Customs, the purpose of Duty is to bring the cost of imported goods up to the same cost as those produced within the EU to keep competition fair. Taxes correspond to the VAT applicable to the type of goods imported.

Calculations for Duty and Taxes are complex with several different elements taken into account.

In general, the calculations are based upon the goods description provided on the air waybill and its associated commodity code however, other factors such as origin and reason for import may all contribute to the overall value. Some commodities are also subject to other charges such as Excise Duty and CAP levies.

We have broken down the calculations into the two formulas below:

Duty

Duty is calculated against the value of the shipment contents declared on the air waybill together with any insurance costs and a percentage of the transportation cost. Together these are known as the Value for Customs. This value is then multiplied by the Duty percentage of the Trade Tariff commodity code given to the goods by the shipper. You can use this Trade Tariff guide to look up the commodity codes and the assigned Duty percentage, as allocated by HMRC.

 Put into a simple calculation:

                        Value of your shipment contents (inc insurance) + % of the Freight charges

                                                                x Duty % of Trade Tariff

VAT

VAT is calculated against the Value for Customs plus import duties and levies but may also include a value adjustment.

Put into a simple calculation:

            Value of your shipment contents + Freight charge + Duty + Post Landing Fee (£0.33 currently)

                                                                    x VAT rate %

The VAT % can be 20% or 5% or 0% which is derived from the Tariff Heading & Reason for import. 

Please note that a Duty and Tax invoice can include additional FedEx Ancillary Clearance Fees, handling and/or storage charges, Anti-Dumping Duty/Countervailing Duty or other government facility fees.

If you have an account log on for fedex.com you can use our FedEx® Global Trade Manager to estimate the possible duty and taxes and gain further guidance.  Please note the tool will require you to provide the commodity code for the content of your shipment to provide accurate information.

For more information, you can also visit our Duties and Taxes page.

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This Q&A is provided for information only and the answers do not have a contractual value. For additional information, you can refer to FedEx Conditions of Carriage for EMEA available at fedex.com.

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