Organisations wishing to trade between China and the UK need to abide by a series of requirements that are crucial to ensuring smooth business practices.
The UK does not have a specific trade deal with China. Consequently, trade is done on non-preferential WTO (World Trade Organisation) terms. Whether you need to pay import tax on your goods and the incoterms being used in the trade and what kind of product you are importing.
Now, if you are shipping products on DDP (Delivered Duty Paid) incoterms, then the selling party will take care of the import customs clearance, therefore you will not need to pay any duty on the goods.
However, the overwhelming majority of goods trade between China and the UK is done on FOB (Free on Board) incoterms, which means the buying party are responsible for organising the sea freight transportation, onward transportation to the delivery location and, the import customs clearance.
If you are responsible for the import clearance, you need to find the correct commodity code (10-digit number) for the products you are importing to complete the correct import declarations and other paperwork.
You can locate these by using the UK Government Trade Tariff, where you can look up the commodity code, duty and VAT rates for anything. You will also be notified if you can apply for a preferential duty rating. Be sure to switch to the Northern Ireland Online Tariff if you're in NI, as your rates are different to the remainder of the Great Britain.
On the trade tariff page, type the name of your product in the search box and it will look for its commodity code. After that you should be able to click through the categories find your product's exact code.
If you scroll down it should also give you the import tax rate for your product from every country. So, you just need to see what the rate is for import from China. Check out the example below where I look up the commodity code and import duty rate for a chocolate bar coming from China.
As you can see above, China is not one of the countries or trading bloc's that the UK has a deal with on this particular product. It just falls under "all countries", therefore a tax rate of 8% is due.
As a side note, it can sometimes be very difficult to find your commodity code if you are importing a complex product into the UK. If you apply the wrong code, you could end up paying more duty than you need to or your goods could be held up by customs. But don't worry if you're not sure, there are solutions.
Top tip: Keep a written record explaining why you came to a particular decision on a commodity code. If customs officials can see evidence and logic for using that commodity code, rather than trying to be deceptive to avoid duty, they are likely to view the case more favourably.
WTA UK is more than happy to assist in ensuring that you have the correct commodity code. Contact us.
You must pay the required rate of duty and VAT, as stated with the commodity code. If payment isn’t made, your goods could end up getting held up in customs causing delays and unexpected costs.
The duty is paid on the cost of the goods and the shipping costs. There are 6 ways to establish the value of your goods, which you can read about here. Duty rates tend to range from 0-12%.
Once you have applied the duty rate, you then need to add VAT on top of that at 20%. But remember, if you are VAT registered you should be able to claim back any VAT paid on the goods you have imported.
Completing a customs declaration is quite a complicated process. If you want to do the declaration yourself, you’ll need to apply for access to Customs Declaration Service (CDS) and have the necessary software to submit the declarations through it. We recommend that you undertake customs training to ensure that you are compliant.
Alternatively, you can consult with an expert customs broker, such as WTA.
WTA's systems allow us to input customs information electronically, calculating payable duties and taxes, and checking for errors automatically.
Any information submitted to customs yourself or through a customs broker needs to be thorough and correct. Ensure you have included full details on all the labels and invoices that state the address of the sender and receiver, the quantity of the goods, their value, the commodity codes and a complete description of the contents.
Working with WTA UK means we can easily assist in managing this imports process for you. We will also work with you to make use of bonded warehouses where possible. These allow you to delay duty payments until such a time as the goods are sold, dramatically improving cashflow.
When looking to import from China, it is essential to engage seasoned professionals like WTA. We do the hard yards for you, ensuring that your goods make a seamless journey and are compliant with all trade requirements.
Before importing your goods from China, we work with you to take the necessary steps listed above to ensure a smooth sailing operation.
Speak to Jamie Craig, our Customs Specialist, for more specialist guidance today.