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How to Calculate Import Duties and Taxes in the UK


To run a nation, the government needs to collect money from its citizens in taxes. Paying tax to the government is part of everyone’s lives. Taxes are compulsory contributions imposed by a government agency on individuals or corporations, whether municipal, regional, or national.

Import duty is a tax imposed by a country’s customs officials on imports and select exports. The value of the products usually determines the amount of import duty charged. When you purchase items from other countries for delivery to the UK, the senders should fill out a commercial invoice and include it with the shipment.

The purpose of the commercial invoice is to show UK customs the worth of the product(s) entering the country, as well as the entire cost of shipping and insurance. The “worth” of your items will be determined by adding the product value, shipping costs, and shipping insurance together.

Import duty in the UK after Brexit

After the termination of the Brexit transition period, the European Union’s Common External Tariff (CET) was replaced with the UK Global Tariff (UKGT), i.e., the charges for shipping your products to the UK are different if your country does not have an agreement with the country you’re purchasing your goods from.

How is import duty calculated in the UK?

If you’re purchasing a product from India to the UK that is not a gift, then to check the import duty, you’ll need to check the commodity code for that product. Suppose you’re importing chairs from India to the UK. The item cost 20000 euros, and the shipment and insurance on that product cost 5000 euros.

  • So to find out the import duty to be paid, you’ll need to check the commodity code for chairs and the import duty on them; here, it is 5%.
  • So 5% of (20000+5000) is 1250 euros. So for the product, tax, and import duty, you’ll need to pay a total of 26250 euros. Also, if you are importing outside of the EU, you also need to pay the VAT on this amount.

Import duty when you import goods from European countries

In general, items bought from the EU should already be “duty paid,” allowing them to transfer freely throughout the EU and avoiding payment! So, if you find a product in Germany or France that you want to buy and send back to the UK, it’s as simple as organizing a pickup in London and delivery to Birmingham. Although you need to pay VAT in the purchase price of the product in the EU country you buy the item from.

How is income tax calculated in the UK

The amount of income tax you owe is determined by your earnings. The government determines the income tax rates. If they are altered, it is normally in the Spring or Autumn Budget.

IncomeTax rate 
Up to £12,5700%Personal allowance
£12,571 to £50,27020%Basic rate
£50,271 to £150,00040%Higher rate
over £150,00045%Additional rate

The government just changed the income criteria, but the tax rates remain unchanged. When calculating your taxes, keep in mind that the rates only apply to a percentage of your income, not the entire amount. For example, if you earn £80,00 per year, you will not be taxed 40% of that amount. i.e;

  • £12,500 will be tax-free.
  • 20% on £37,700
  • 40% on the remaining 29,800£.

How to pay import tax

If you have to pay import duty on a package, UK customs will notify Royal Mail or your courier, who will contact you. You won’t have to worry about figuring out how much you need to pay or when it’s due because they’ll inform you.

You may normally have your supplier give the shipping invoice before the delivery to save time. This means you can notify Royal Mail or your courier ahead of time and pay the fees before your items arrive in the UK.

Import duties and taxes are collected by the government for the nation’s welfare. They increase the income of the local government. The primary reasons for import duty and taxes are to raise revenue and safeguard local products. They play a great role in protecting our country’s environment and finance.

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