Certain goods are liable for excise duty, whether you produce them in the UK, or import them from any other country. Each country has its own (differing) duty rates. Duty is separate from customs tax.
Goods that are subject to excise duty
Broadly speaking, duties are applied to alcohol products, tobacco products and energy products. There are about 14,000 different classifications - too many to list here, and the the duty rate percentage varies according to the product and the country it comes from. The average percentage is between 5 and 9%, but it can be as low as 0% or up to 85%.
In the main, duties are due on:
- Tobacco (including cigars and cigarettes)
- Mineral oils, heavy oil and certain other types of oil
- Various fuels
- There are other types of duty. Check with HMRC if you are unsure.
How excise duty is calculated
Excise duty is calculated according to the quantity of a product rather than its value. There are exceptions to the rule though - alcohol duty is based on its strength, and the duty on cigarettes is in part based on their retail value.
When you pay excise duties on imported goods
You pay excise duty on imported goods once they enter the UK. If you are using a courier company, these costs are paid on demand and then charged to you. If you are importing goods on your own, an import agent could manage the payment of duties. Alternatively, freight forwarders can handle customs duties. You can find reputable freight forwarders through the British International Freight Association.
Small business reliefs
There are certain reliefs from duties available for small businesses. You may be able to take advantage of special inward processing relief rules so that you do not have to pay import duty and VAT. This relief can apply to imports that you process before re-exporting them.
Contact HMRC to find out if your business qualifies.
Deferring your excise duties
Regular importers can defer payment of excise duty by opening a deferment account with HMRC. You need to provide security and must pay by Direct Debit. Talk to HMRC to find out more about this.