Import tax for online shoppersTax warning for online shoppers

18 October 2005

Online shoppers buying bargains from abroad have been warned they could be fined and have the goods seized if they try to duck import taxes.

Officers at HM Revenue & Customs (HMRC) says the boom in internet shopping has resulted in a dramatic increase in the number of packages on which customs duty and import VAT is due.

In the last year, 434,000 parcels arriving in the UK were affected, particularly from suppliers in the US.

Generally, when you buy goods online worth more than 18 GBP, you have to pay VAT and duty. For example, if you buy several CDs online from the United States, you're liable for 3.5 per cent import duty, and 17.5 per cent VAT on that total. But many people are unaware of these extras. HMRC says some of those who complained after Customs officers picked out their untaxed parcels had mistakenly assumed that the 145 GBP 'passenger's allowance' applied.

Tax bill from the postman

Customs Anti-Smuggling Manager Phil Colclough said:'We don't want to put people off internet shopping, where there are undoubtedly bargains to be found. However, we do want to make sure that online shoppers are quite clear about the full costs involved, and that there are no unpleasant surprises when the postman knocks at the door.

'It is important that UK and foreign internet companies can trade on a level playing field. Therefore tax on purchases needs to be applied fairly to all.'

If you purchase goods over the internet you may be liable to pay Customs import duty and VAT if the value of the goods is 18 GBP or above. These must be paid whether:

  • you purchase the goods or receive them as a gift
  • the goods are new or used
  • the goods are for your private use or for sale

Customs duty is not payable on goods bought from countries within the EU. However, VAT may be due in the UK if the EU supplier is UK VAT-registered.