VAT on imports
Generally, VAT on imports is the same rate as if you were buying goods from within the UK. But you need to do the right paperwork and know the rules. Importing from within the EU is fairly straightforward, but it's a little more complicated importing elsewhere.
You need to tell HMRC about all goods you import from abroad - known as declaring.
An accountant is always worthwhile for more complicated tax affairs, but this guide can give you an introduction to the rules and an idea about whether you think you'll be able to handle VAT on imports on your own.
VAT on imports from within the EU
- If you buy goods from within the EU whose total value is more than £70,000 over the course of the tax year, you need to get VAT-registered in the UK.
- The process of importing good from within the EU is called acquisitions rather than imports by HMRC.
- The VAT on goods imported from the EU that are in free circulation is known as acquisition tax.
How much is the VAT (acquisition tax)?
- You pay the VAT (acquisition tax) at the same rate as the VAT would be if you had bought the good in the UK.
Keeping records of the VAT (acquisition tax):
- Keep records throughout the tax year in the same way you would for goods bought in the UK.
- The date of 'supply' (when you bought the goods for the purposes of HMRC) is the date when the transaction actually took place. Use the date the supplier put on the invoice if you're unsure.
- The value of the goods has to be recorded in pounds sterling.
- You can use the rates published in newspapers.
- Or you can use the rates published by HMRC - this is typically easier, as the usually only change once a month, rather than daily, like newspaper rates can.
- If you want to use a different set of conversion rates (which may offer commercial advantages) you have to write to HMRC to see if they'll let you.
Reclaiming the VAT (acquisition tax):
- You reclaim the VAT (acquisition tax) in the same way as you would as if they'd been bought in the UK.
On your end of year tax return, you put in the details of your total acquisition tax into box nine. You include it in your total in box two.
Other documentation you might need:
- If the total value of your imported goods in a tax year is more than £260,000 you may have to fill out an Intrastat Supplementary Declaration. Talk to HMRC for more info.
VAT on imports from countries outside the EU
You need to declare goods imported from outside the EU to HMRC (using an import declaration form) and pay VAT and duty due on them.
How much is the VAT?
- VAT on imports from countries outside the EU is charged at the same rate as if you were buying goods inside the UK (except for art, antiques and collector's items, which get a reduced rate).
Keeping records of the VAT:
- Keep records of all imported goods and the VAT you pay on them as you would if you were buying goods from within the UK.
- The value of the goods for your records is their customs value plus incremental charges (shipping, packaging, etc), any customs duty, any excise duty, any levies and any other charges for bringing the goods into the UK (apart from the VAT).
- The value of the VAT is in box 22 of the import declaration. (If it's not, write 'VAT' in the rate column of box 47, calculate put the amount and write it in the amount column.)
Reclaiming the VAT:
- If you're VAT-registered in the UK you can reclaim the VAT you're charged as input tax - you need to fill out a form C79 to do this (shipping and forwarding agents, normally, can't reclaim).
- If you're not registered, you still have to pay the VAT but you can't reclaim it. So if you're planning on doing a lot of importing it's well worth looking into registering.
How and when you pay VAT on imported goods from any country
The following rules apply whether you're importing from within the EU or outside it:
- You normally pay the VAT at the time the goods come into the UK.
- If you are receiving a postal order worth less than £2,000, you can wait until you submit your VAT return to pay.
- If you are a regular importer and the value of the VAT is high, you may be able to arrange with HMRC to defer payments for up to 30 days. Speak with HMRC to see if you qualify.
- If you're making numerous VAT payments in imports, you may be able to HMRC's Duty Deferment Scheme and Simplified Import VAT Accounting (SIVA), which simplifies the process so you only have to make one payment a month. Find out more about it here.
- If you are storing the goods in a customs warehouse, you are importing from a free zone, you are only importing goods from outside the EU on a temporary basis or you are using community transit, different rules apply and you may not have to pay all or part of the normal VAT owed. See the bottom sections of this HMRC page for more info.
Declare: to tell HMRC about goods you are importing or exporting through the correct paperwork (an import declaration form and any other forms necessary)
Free circulation: goods that have come from another EU country or from somewhere outside the EU but with VAT and duty paid
Released: when HMRC allows you to bring the goods into circulation, to use or trade them (when all VAT and duty has been paid)
Acquisitions: what you call importing within the EU
Acquisition tax: the VAT on goods bought/imported from within the EU that are in free circulation (the equivalent of input tax on goods bought within the UK)
What about if I'm buying services abroad? Do I need to take account of VAT with them?
Yes, in some cases. If you do, you act as both the supplier and the buyer, so you charge VAT then also claim it back, so the VAT cancels out leaving you with no charge (this is known as reverse charging, or 'tax shift'). But as services abroad is a more complex affair, you need to speak to HMRC to find out what to do.
What if I'm sending the goods straight to another EU country?
You may not have to pay VAT. Read more about this case on the HMRC site.
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