With the trigger finally pulled on Article 50, David Jinks, head of consumer research at international delivery specialist ParcelHero, reveals 10 tricks of the trade that will beat the imposition of duties and VAT.
British manufacturers and retailers exporting overseas can no longer keep their head in the sand. With the process of leaving the European Union firmly underway, what can British business do to ensure it is not too badly impacted – even if there is no single market agreement and our goods hit Customs duties and fees on arrival in the EU?
ParcelHero’s head of consumer research, David Jinks, says there are many ways to avoid the worst impact of duties, taxes and Customs delays, if negotiations don’t go smoothly and the barriers go up for UK goods sent to the EU. “British firms, from online marketplace traders and SME’s to large corporations, must research their markets, know their relevant product HS tariff codes inside out, and capitalise on the essential ‘Britishness’ of their products,” he said.
1 Look for smaller, high value items
Large, low value items, such as some car parts, will incur high transport costs and potentially steep tariffs. “The best bet is to look to smaller, high value, items which are not reliant on small margins to make a profit,” said Jinks.
2 Check what products incur duty
Many products incur no import duties when shipped to the EU from outside. “Have you ever wondered why your digital camera only records 30 minutes of video? That’s because it must be classified as a digital camera and not a video camera to qualify for duty exemption arriving in the EU. Study your relevant tariff codes – available on the HM Customs website. A digital camera has the code 8525803000 and is duty exempt everywhere in the EU,” says Jinks.
3 Look for other exemptions
Other products with zero tariffs to pay on arrival in the EU include:
- Computer Software
- Desktop PCs
- Mobile Phones
- Video Game Consoles
4 Go with what you are good at
“Since the vote we’ve shipped notably more high-quality products to the EU than previously: varying from traditional Scottish broaches, polo equipment and prom dresses; to toy soldiers, live steam garden locos, dolls house furniture and bespoke hand-made chairs,” says Jinks. “These are all the kind of products that will continue to make money even with increased shipping costs and duties. And with the low value of the pound, British-made goods are great value in the EU and beyond.”
5 Out with the new and in with the old
Antiques over 100 years old are free of duty and have reduced VAT value,” says Jinks. “Items under tariff heading 97.06 exceeding 100 years are free of duty under the snappily titled ‘EU Combined Nomenclature Regulation’ – except for pearls and loose gemstones,” he says.’
6 Split up your shipments to keep under duty threshold limits
Shipments valued at under 150 Euros (or £135 in the UK) have no duties to pay. “If you are sending two items worth just under 150 Euros don’t ship them in the same consignment – instead stagger shipments,” says Jinks.
7 Look out for exemptions
You can even avoid VAT on your shipment if it is worth less than 22 Euros (or £15 entering the UK). “But watch out for tobacco, alcohol and perfumes as they are always liable; and sneaky caveats from countries like France that actually impose VAT on all qualifying goods, even under 22 Euros, if they were bought online,” warns Jinks.
8 Look beyond the EU
For example, goods sold to the USA can be worth up to $800 before any duties and taxes are due. “It used to be a much meaner $200 but the duty threshold was upped last year: so many British goods are great value in the US now,” says Jinks.
9 Pay Customs fees yourself
If you are worried EU shoppers and merchants won’t take your goods because of tariff and tax issues you can always pay any Customs fees yourself, up front, so that the buyer has a final price with no nasty surprises. “The most common reason for goods being stuck at Customs is because the buyer won’t pay unexpected duties,” says Jinks. “By paying these yourself your buyer knows where they stand. Who needs more costs and complications, especially if you have to ship back rejected goods yourself?”
10 Research, research, research
Remember duties are different for different products in different countries so research your market. For example, there is 2.7% duty to pay on a golf club imported to the UK from outside the EU. If you are exporting clubs to the USA, the duties to pay there are 4.4%. In some other countries the duties to pay on imported clubs can be significantly higher. “The import duty on gold clubs is 30% in Jordan. So if you are golfing in Jordan and you’ve forgotten your clubs – borrow someone else’s,” says Jinks.
For more exporting advice from ParcelHero, watch David’s webinar Exporting made easy: a guide to sending your goods overseas, held in conjunction with the Department for International Trade’s Exporting is GREAT campaign.
Image credit: Parcelhero