Import tax

Penguin666

Hi all,
Im struggling to understand what the point of importing items and selling them in the Uk is, if the purpose of import tax is to make sure the prices are fair and inline with EU prices? 

My grasp of it is if I buy an item, from say China for £5 and want to sell it in the UK for £10, and customs value the item at £10 in the U.K., then I’m going to be charged £5 income tax plus other charges?

Im new to this so go easy.

Thanks!

Sandtree

First of all there is no such thing as "import tax"

Duty is applied to certain goods coming from certain countries... there is in reality a host of reasons why this is the case but the simple explanation is to try and level the playing field so that companies in the destination country and complete with companies in the country of origin. Some items have no duty and others it can be fairly high.

In addition to Duty you also have to pay sales tax (VAT in the UK) which is the same for almost everyone, if you yourself are VAT registered you can claim that back but then have to charge your customers VAT (and obviously unit price + profit margin x 120% is more than just on the unity price).

As you may have already found out, many couriers will charge you an admin fee for doing the HMRC declarations and clearance for you but that tends to be flat irrespective of the values.

All of the above are based on the price you've paid to get the goods here not what they would sell for here (tobacco and alcohol an exception).

Income tax is something totally different but assume that was just a slip.

You import something because you can by 10,000 widgets for a landed cost of £500, you pay 10% duty (so now £550) and 20% VAT (so now £660) and a £12 handling fee (£672). You bag them into packs of 10 in a 1p bag so your fully landed cost and repackaged is £0.68 and you sell them at the market for £1.50 so make a reasonable margin per item and undercutting B&Q that sells something that looks the same for £2 for a pack of 5.

Clearly you need to know what rate of duty applies to the products and make sure you are getting a good price in the first instance. Some things aren't work importing, some things you will make a big margin on (especially before having to become VAT registered)

Penguin666

Sandtree, thank you for that informative response!  I think a key point you’ve made is finding an item that is worth importing which I’m hoping I’ve done by chance! Is there a list somewhere which I can check the rates?

Thanks you for your help! 

Sandtree

The official route is via https://www.gov.uk/trade-tariff

There are some helpful websites out there too where you can put details of what, how much, from where etc and they will calculate what Duty and VAT will be due... I've never tested the accuracy of them so will let you google them to find for yourself.

oldbikebloke

don't know why you started another thread on the same topic.

given your poor research to date I will save you the effort of using google: 

How do you calculate import duty on China goods?

https://transferwise.com/gb/import-duty/from-china#:~:text=The%20shipment%20is%20worth%20more,for%20that%20code%20%E2%80%94%204.5%25.

the commodity codes are in the link I gave you on the previous thread