How to Pay UK Import Duty Tariffs & VAT on Imports Outside UK

To pay UK import duty and VAT on goods from outside the UK, you either pay at the border (via your carrier or customs agent) or account for it through HMRC schemes like Postponed VAT Accounting (PVA).

When you import goods into the UK from overseas, two charges can apply before your stock even reaches your warehouse: customs duty and import VAT. Together, they can add a significant amount to your landed costs – and if you're not set up correctly, they can tie up your working capital at the worst possible moment.

The good news is that once you understand how to pay UK import duty tariffs, and which payment options are available to you, dealing with them becomes much more straightforward.

Key points

• Customs duty and import VAT are two separate charges 🗒️
  Customs duty is based on what you're importing and where it's from. Import VAT is charged on top, at 20% for most goods. Both are calculated on the full customs value of your shipment, not just the invoice price.
• The £135 threshold determines whether duty applies 📦
  Goods with a customs value below £135 are exempt from customs duty, but import VAT is almost always still due. Above £135, both charges apply, and you'll need to make a customs declaration.
• VAT-registered businesses can defer import VAT 💷
  Postponed VAT Accounting lets you account for import VAT on your VAT return rather than paying it upfront at the border. It's a significant cash flow benefit, and it's available to all UK VAT-registered businesses with no application required.
• You need an EORI number and CDS access before importing commercially 🆔
  A GB EORI number is your customs ID. The Customs Declaration Service (CDS) is the HMRC platform where declarations are processed, and your monthly VAT statements are generated. Both are free to set up.
• Staying organised matters when you're importing regularly 🚀
  Tools like ANNA help self employed people and small business owners manage cash flow, set money aside for import costs and tax bills, and stay on top of financial deadlines, so nothing slips through the cracks.

What is customs duty?

Customs duty (also called import duty or tariffs) is a tax charged on goods entering the UK. The rate you pay depends on two things: what you're importing, and where it's coming from.

Rates are set by the UK Global Tariff (UKGT), which HMRC maintains and updates. Every product you import has a commodity code – a Harmonised System (HS) classification that determines your exact duty rate. You can look up commodity codes using the tariff tool on GOV.UK.

Here are the current rates, as of April 2026:

Since Brexit in January 2021, goods from the EU are treated the same as goods from anywhere else in the world. There's no automatic duty exemption for EU suppliers, unless the goods genuinely originate in the EU and qualify under the UK–EU Trade and Cooperation Agreement.

⚠️ Worth knowing

‘Originating’ in the EU doesn't just mean shipped from the EU. If your goods were manufactured in China and imported into Germany before being sent to you, they won't qualify for the zero-duty rate.

Always check the rules of origin with your supplier before assuming you'll pay 0%.

What is import VAT?

Import VAT is a separate charge to customs duty, applied when goods cross the UK border. It's not paid to your overseas supplier but to HMRC as part of the customs process.

The standard rate is 20%, applied to the full customs value of your goods. Some goods attract the reduced rate of 5%, and others are zero-rated.

Here’s broadly how it works:

The customs duty threshold

When you import goods into the UK, whether you pay customs duty and import VAT depends mainly on the value of the goods and whether they’re a commercial purchase or a gift.

The key threshold to understand is £135, as this determines how the charges are applied and who is responsible for paying them.

Here’s a quick breakdown:

In short, £135 is the tipping point. Below it, you usually only deal with VAT (often collected upfront). Above it, you’re dealing with both duty and VAT, which makes imports more expensive and slightly more complex to manage.

🧠 Good to know

Both customs duty and import VAT count as allowable business expenses, so make sure they're recorded correctly to reduce your taxable profit.

How is the customs value calculated?

The customs value isn't the price you paid your supplier. It's the CIF value: Cost, Insurance, and Freight. That means the invoice price of the goods, plus international shipping costs, plus insurance.

Here's a straightforward example:

• Goods (invoice price): £2,000
• International shipping: £250
• Insurance: £30
• Customs value (CIF): £2,280
• Customs duty (3.5%): £79.80
• Import VAT (20% of £2,359.80): £471.96
• Total charges: £551.76

So, on a £2,000 order, you'd owe just over £550 in duty and VAT before factoring in any courier handling fees.

🧠 Good to know

If you're importing regularly, those costs add up fast. With ANNA’s business account, you can get access to smart pots that let you automatically set aside money for import costs as soon as payments land in your account.

That way, when the duty and VAT bill arrives, the funds are already there.

Reclaiming import VAT as a VAT-registered business

If you're importing goods for business purposes and you're VAT-registered, you can reclaim the import VAT you've paid as input tax, subject to the normal rules.

Here’s how:

Both documents should be kept alongside your other VAT records.

If you're using PVA, remember that statements are only visible on CDS for six months from publication date, so set a monthly calendar reminder to download each one.

🧠 Good to know

ANNA's real-time tax estimates can make a difference here. As you import throughout the quarter, you can see your VAT position before the return deadline, so there are no surprises when the time comes to file.

Getting set up: what you need before you import

Here’s what you’ll need in order to successfully import your goods:

A GB EORI number

An Economic Operators Registration and Identification (EORI) number is your customs ID. Every business importing commercially into Great Britain needs one.

You apply through HMRC's website. It's free, takes around 10 minutes if you have your business details to hand, and your EORI will usually be your VAT number followed by three zeros.

If you're moving goods to or from Northern Ireland, you may also need an XI EORI number, which you can apply for through the same Government Gateway process.

Access to the Customs Declaration Service

Customs Declaration Service (CDS) is HMRC's platform for processing all customs declarations. You'll need your EORI number linked to your Government Gateway account to subscribe.

It's also where your monthly Postponed Import VAT Statements appear if you use Postponed VAT Accounting. Subscribing is free and typically activates within a few hours.

How to pay UK import duty tariffs and import VAT

There are three main routes, depending on how often you import and whether your business is VAT-registered:

Option 1: Pay at the border through your courier or freight forwarder

For occasional importers, the simplest approach is to let your courier or freight forwarder handle the customs declaration. They pay the charges on your behalf and invoice you – often adding a handling fee on top.

It's easy to set up and requires no prior admin, but it means the money leaves your account immediately, before your goods have even arrived.

Option 2: Use Postponed VAT Accounting – for VAT-registered businesses

PVA is the most popular option for VAT-registered businesses. Instead of paying import VAT at the border, you account for it on your next VAT return. If you're reclaiming it as input tax, the amounts effectively cancel out – and the cash never actually leaves your account.

PVA has been permanently available to all UK VAT-registered businesses since January 2021. You don't need to apply or get prior approval from HMRC.

Here’s how to use PVA:

⚠️ Worth knowing

PVA affects import VAT only. Customs duty is still payable at the point of import, either through your courier or via a Duty Deferment Account.

Option 3: Set up a Duty Deferment Account – for high-volume importers

A Duty Deferment Account (DDA) lets you consolidate all your customs charges – duty, excise duty, and import VAT – into a single monthly Direct Debit, rather than paying per shipment. It's designed for businesses that import frequently and want smoother cash flow.

To set one up, you apply through HMRC and provide a financial guarantee, either from a bank or through HMRC's own guarantee waiver scheme for eligible businesses. There's more admin to get started, but for high-volume importers, it can make a meaningful difference.

ANNA – A simpler way to manage your import costs and cash flow

For self employed people and small business owners, importing isn't just about paying the right charges at the right time. It's about keeping enough cash in your business to absorb those costs without disrupting everything else.

Unexpected import duties, VAT charges, and shipping costs can quickly put pressure on day-to-day finances, especially when payments are due before you’ve been paid by customers yourself.

Here's how ANNA can help:

• Smart Pots: Automatically set money aside for import VAT, duty costs, and tax bills as soon as you get paid, so the funds are ready when you need them.
• Real-time tax estimates: See what you may owe in tax as you earn, making it easier to plan for import costs alongside VAT and Self Assessment obligations.
• Automated bookkeeping: Track income and expenses automatically, so your records are accurate and organised when it's time to file your VAT return.
• Free Self Assessment filing: If you register with ANNA now, you'll get free Self Assessment filing for the 2025/26 tax year. Even if you've already registered elsewhere, ANNA will refund the filing fee when you switch.
• Built-in UK business account: Manage your money and bookkeeping in one place, with less back-and-forth between apps and fewer things to keep track of. You can also hold foreign currencies as well as send and receive money internationally.
• Smart reminders and alerts: Stay on top of VAT return deadlines, duty payment dates, and monthly PVA statement downloads, so nothing slips through the cracks.
• 24/7 support: Get help whenever you need it, without having to manage everything on your own.

So get started with ANNA today, and take the stress out of importing for good.