Import tax

Penguin666

Hi all,

I think I’ve me a beginners big mistake 😬

I’m looking to start my own business in December and I’m just getting everything ready such as the website etc and bought goods from China. I bought 24 necklaces had them delivered and thought great. They cost £50 and I won’t make much off them and then a few weeks later, I have received an import invoice from Fedex for £30! I wasn’t expecting this and this makes the items very expensive now. Can someone let me know is this a out right? Seems a lot for 24 tiny necklaces? 

I haven’t  registered as a business yet as it’s not up and running but do I need to register now because of this?

I also have £1000 worth of stock on its way, so I’m guessing I’m expecting a mega bill for this too soon?

Many thanks,

Your novice...

oldbikebloke

£30 is low
the charge is not just import tax (VAT or duty) it is also Fedex's "handling" charge for processing said duties. So yes, you have made a beginners error and you can expect a charge for £1,000 as well
it has nothing to do with whether you are or are not a registered business, import duty, Vat, and handling all apply to personal purchases as well 
https://www.gov.uk/goods-sent-from-abroad

sounds like you need to read every page of this 
https://www.gov.uk/topic/business-tax/import-export

Penguin666

Thank you! That makes sending good from abroad a pretty poor deal then!

oldbikebloke

Penguin666 said:

Thank you! That makes sending good from abroad a pretty poor deal then!

rather the point. Until you are Vat registered and can reclaim it, the purpose is to level the playing field between goods made in the UK and those imported.

martindow

If you are VAT registered it's not a magic bullet.  Your selling prices are increased by 20% VAT.  Although you can reclaim the import VAT unless your business is disastrous, you should be collecting more from your sales to pay to HMRC.

Sandtree

Penguin666 said:

Thank you! That makes sending good from abroad a pretty poor deal then!

On the basis of what proportion of goods are manufactured in China etc then that clearly cannot be the case.

Your bill includes a clearing fee, that fee stays the same if its a £5 bill or a £50,000 bill and so the per unit cost goes down as you buy more. If you really want to you can go through the process of clearing yourself and avoid the fee totally but its generally not advisable to do unless you really know what you're doing as it adds a fair amount of complexity.

You simply need to consider the fully landed cost when deciding if to buy something or not rather than just the headline cost for the merchant. Its very much possible to make good profits from buying overseas and doing things legitimately but that doesnt mean you can just buy anything and certainly make a profit.

Some tackle things a different way and use dropshipping so the end customer is the one that gets hit by import fees however unless you really are dirt cheap compared to others you won;t get much repeat business.