Quizzes & Puzzles1 min ago
Shipping cost from the US
7 Answers
Im looking to buy some clothes from a US website but im having a little trouble with the shipping cost can someone tell me what it all means please.
Customs duty � Typically 12-20% of product price (based on product characteristics)
Import VAT � Currently 17.5% of the Total Order Cost (including shipping cost)
Advancement Fees � FedEx fee for processing of duties/fees (currently $8.00 USD)
Order Value X Duty Rate = Duty Due*
Order Value (including shipping) X VAT Rate = Tax Due*
Tax Due + Duty Due + Fedex Advancement Fees ($8US) = Total Due at Delivery
Customs duty � Typically 12-20% of product price (based on product characteristics)
Import VAT � Currently 17.5% of the Total Order Cost (including shipping cost)
Advancement Fees � FedEx fee for processing of duties/fees (currently $8.00 USD)
Order Value X Duty Rate = Duty Due*
Order Value (including shipping) X VAT Rate = Tax Due*
Tax Due + Duty Due + Fedex Advancement Fees ($8US) = Total Due at Delivery
Answers
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Most clothing imported from non-EU countries attracts Import Duty at 12%. (There are a few exceptions, such as baseball caps, which are only charged at 2.7%). However, as far as I'm aware, the UK is still currently charging an extra 15% duty on cotton-based products imported from the USA. (This is a trade sanction, imposed in accordance with World Trade Organisation rules, because the USA are in breach of WTO rules on subsidies for cotton producers).
So, our customs people (HMRC) require you to pay 12% (for non-cotton clothing) or 27% (for cotton based clothing), of the purchase price, as Import Duty.
Additionally, most goods and services purchased from non-EU countries require payment of VAT at our standard rate of 17.5%. The 'services' referred to include shipping from the USA, so HMRC require you to pay 17.5% VAT on both the price of the goods and on the shipping charges.
Normally you have to pay these fees to the postman when he calls at your door but it's possible for a US trader to arrange for these fees to pre-paid in the US. This is done through FedEx, who make a charge of $8 for their service. (This is actually cheaper than leaving the fees until this end. Packages with pre-paid fees bypass the usual customs inspection process in the UK and so avoid the �8 charge that the postman would otherwise require).
That might be easier with a 'worked example'. Let's suppose that you buy cotton-based clothing for $200 and the shipping charge is $30.
Customs duty is 27% of $200, so that's $54.
VAT is 17.5% of $230, so that's $40.25
FedEx charge a flat-rate fee of $8, so your total bill is $200 + $30 + $54 + $40.25 + $8 = $332.25
Any clearer?
Chris
So, our customs people (HMRC) require you to pay 12% (for non-cotton clothing) or 27% (for cotton based clothing), of the purchase price, as Import Duty.
Additionally, most goods and services purchased from non-EU countries require payment of VAT at our standard rate of 17.5%. The 'services' referred to include shipping from the USA, so HMRC require you to pay 17.5% VAT on both the price of the goods and on the shipping charges.
Normally you have to pay these fees to the postman when he calls at your door but it's possible for a US trader to arrange for these fees to pre-paid in the US. This is done through FedEx, who make a charge of $8 for their service. (This is actually cheaper than leaving the fees until this end. Packages with pre-paid fees bypass the usual customs inspection process in the UK and so avoid the �8 charge that the postman would otherwise require).
That might be easier with a 'worked example'. Let's suppose that you buy cotton-based clothing for $200 and the shipping charge is $30.
Customs duty is 27% of $200, so that's $54.
VAT is 17.5% of $230, so that's $40.25
FedEx charge a flat-rate fee of $8, so your total bill is $200 + $30 + $54 + $40.25 + $8 = $332.25
Any clearer?
Chris
Well spotted, Trotbot!
I've answered several similar questions before and always remembered that HMRC effectively charge you tax on tax. I'm kicking myself for forgetting it this time. Thanks for correcting me!
Tricktrick: Please accept my apologies for slightly inaccurate information and increase my figures by $9.45. i.e. the $200 purchase, in my example, would actually cost you $341.70.
Chris
I've answered several similar questions before and always remembered that HMRC effectively charge you tax on tax. I'm kicking myself for forgetting it this time. Thanks for correcting me!
Tricktrick: Please accept my apologies for slightly inaccurate information and increase my figures by $9.45. i.e. the $200 purchase, in my example, would actually cost you $341.70.
Chris
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