Learn how UK business owners can start importing and exporting. Find out about the necessary steps, tax implications, tariffs, VAT, and how Brexit affects trade.
Are you a UK business owner looking to expand by importing and exporting? Whether you want to bring products into the UK or sell them internationally, understanding the basics of international trade is crucial. This guide will explain the key aspects of UK import and export in simple terms.
What is Importing and Exporting?
- Importing: Buying goods or services from abroad and bringing them into the UK.
- Exporting: Selling goods or services to international markets.
Both importing and exporting give your business access to new products and customers, helping you grow and stay competitive.
Why Should You Consider Importing?
Here are some reasons to import:
- Cost Savings: Access to cheaper materials or products abroad.
- Unique Products: Introduce exclusive or high-quality goods to the UK market.
- Increase Competitiveness: Accessing international suppliers may reduce costs.
Why Should You Consider Exporting?
Exporting can benefit your business by:
- Increasing Sales: Access new international markets and increase revenue.
- Diversification: Reducing reliance on the UK market.
- Building a Global Brand: Expanding internationally can enhance your brand’s reputation.
What You Need to Start Importing and Exporting in the UK
- EORI Number:
To move goods between the UK and other countries, you’ll need an Economic Operator Registration and Identification (EORI) number. - Tariffs and Duties:
Understand the taxes, import duties, and trade tariffs on goods you import or export. Check the UK Global Tariff for accurate rates. - Customs Declarations:
You need to complete customs declarations when importing or exporting goods. This ensures goods are declared properly for tax and duty purposes. - Licensing and Restrictions:
Some products require an import or export license, especially controlled items like weapons or hazardous materials. Check UK government guidelines for any restrictions. - VAT and Duties:
- Import VAT: UK businesses must pay VAT on imports, usually at the standard rate of 20%. You can use Postponed VAT Accounting to delay VAT payments until your next VAT return.
- Customs Duty: Some imports are subject to customs duties, based on the product type and country of origin. The UK Global Tariff will help you calculate duty rates.
- Export VAT: Goods exported from the UK are typically zero-rated for VAT. However, you must keep records of the export to avoid VAT charges.
UK Import and Export Tax Considerations
Import VAT and Duty:
When importing, businesses need to pay VAT on goods as they enter the UK. This is based on the value of the goods, plus shipping and insurance costs. If you are VAT-registered, you can reclaim VAT through your VAT return.
Customs Duty:
Some imported goods will incur customs duty, calculated as a percentage of the product’s value. You can find the specific duty rate in the UK Global Tariff.
Postponed VAT Accounting:
To help cash flow, businesses can use Postponed VAT Accounting to delay VAT payments on imports until the next VAT return, rather than paying at the point of import.
Export VAT:
Goods exported from the UK are usually zero-rated for VAT, meaning you don’t charge VAT to international customers. Keep records of the sale and proof of shipment to ensure VAT compliance.
How Brexit Affects UK Imports and Exports
Since leaving the EU, the UK now has new rules for trading with EU countries:
- Importing from the EU: You must now complete customs declarations, and some goods may be subject to tariffs.
- Exporting to the EU: UK businesses exporting to EU countries must follow local import rules, including providing customs declarations and paying any applicable tariffs.
Tips for a Smooth Import and Export Process
- Research Suppliers and Markets:
Make sure you work with reliable suppliers when importing and research international markets thoroughly before exporting. - Use a Customs Broker or Freight Forwarder:
These professionals can help with customs paperwork, taxes, and logistics to make the process smoother. - Understand Legal Requirements:
Comply with all regulations, including tariffs, VAT, and any product-specific rules. - Start Small:
When starting with importing or exporting, begin on a smaller scale to learn the process without significant risk.
Conclusion
Expanding into importing and exporting can open new opportunities for UK businesses. With the right research, compliance with customs and tax rules, and careful planning, you can expand your business internationally and increase your competitiveness.
If you’re ready to start importing or exporting, or need help navigating the process, get in touch with us for professional advice.