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17 Mar 2021

Brexit: the new online shopping and delivery charges you need to know

From VAT and duty, to handling fees and surcharges - the new charges you could have to pay next time you buy something from an EU seller

Delivery delays, surprise charges on cross-border import costs, and a hike in card surcharges later this year - some of us have been surprised by extra charges when shopping online since the UK left the EU.

For a deal that concluded on Christmas Eve, some of this can be chalked up to teething issues. Although, unfortunately, many of these new charges are likely to stay.

Here are some of the changes you need to be aware of to help you avoid surprise fees next time you buy something from the EU.

VAT charges

New VAT rules seem to be causing confusion for everyone. VAT in the UK is, for the majority of products, charged at 20% and will be applied to most goods, as well as gifts worth more than £39.

Some shoppers are being surprised with a 20% VAT charge from the courier delivering their order, who then passes that payment on to HMRC.

According to the rules around VAT charges, a total order of under £135 from an EU seller should include a VAT charge at the point of sale. If the total cost of your order is more than £135 or your gift is over £39, VAT is often collected at the point of delivery.

Since the UK is no longer part of the EU's VAT regime, the new rules require EU sellers to register with HMRC to account for VAT in order to sell to the UK. While most larger retailers are likely to be registered for VAT, the smaller ones might not be.

Unless your receipt shows that you've correctly paid VAT at purchase, you might find you're being chased for it upon delivery.

Import charges

In addition to VAT, online shoppers or holidaymakers who buy items from the EU that cost more than £135 may have to pay additional customs duties.

Customs charges can range from 0 - 25% depending on the goods, finding the right tariff can be a bit of a minefield with so many to choose from. Motorcycles, for example, are charged between 6% and 8% import duty depending on engine size.

Some retailers have clarified that they will try to include VAT and import charges at the point of sale, for example, the fashion company Zalando, Amazon and eBay. But this may not always be the case.

Customs charges should not be applied to products of EU origin, due to the 'rules of origin' agreement between the UK and EU.

Customs duty is often collected from the recipient, not the sender, but you should check your receipt to see if you have already paid the charge. Check the retailer's terms and conditions for clarity on its approach to customs duty and VAT before you buy.

Delivery charges and 'handling fees'

Navigating the new rules appears to be far from smooth-sailing for delivery firms.Logistics giant DB Shenker suspended its delivery services to the UK in January after reporting that only around 10% of its freight had correctly completed the paperwork.

To account for the changes, some delivery firms have introduced additional 'handling costs' for the new checks and paperwork. Royal Mail, for example, is charging a flat £8 handling fee and DHL Express will charge a minimum of £11 or 2.5% of the total duty.

Northern Ireland shoppers

The rules differ for shoppers in Northern Ireland due to its unique position of remaining within the EU's Single Market.

Shopping between Northern Ireland and the EU remains more-or-less unchanged. However, the trade between Northern Ireland and Great Britain has become more complex.

With the new rules and regulations, some retailers based in Great Britain have stopped sales to Northern Ireland. In January, supermarkets saw shortages of fresh produce while deliveries were being held up in the ports. M&S announced earlier this week that it would be reducing the items available to customers in Northern Ireland due to the paperwork delays at the ports.

One shopper shared their experience with us on Which? Conversation:

'I've tried obtaining online various gardening products, also items from the Debenhams sale, only to receive u201cunfortunately due to Brexit we are no longer able to accept orders from Northern Irelandu201d.'

Credit and debit card charges

The payments giant Mastercard announced earlier this year that will increase its charges for UK credit and debit card purchases from EU-based merchants. This will apply from 15 October 2021.

Mastercard's fees will increase from the current rate of 0.3% for credit cards and 0.2% for debit cards, to 1.5% and 1.15% respectively. Interchange fees have been subject to a cap in the EU since 2015 after retailers had long warned that the high charges meant consumers would inevitably absorb the price.

Visa is expected to reveal its plans to increase its charges on interchange fees this week. It is expected to increase its credit card fee to 1.5% and 1.15% for debit cards - reflecting the same fee changes that Mastercard announced earlier this year. The fee will apply to transactions made by UK cards to EU merchants.

When we asked Visa about its plans to increase its charges in January it confirmed that should any change to its interchange fees happen then it will provide advanced notice of this, typically at least six months.

The new charges will be a substantial uplift on the EU capped charges and it's likely that shoppers will feel the impact of this.

If something goes wrong with an order from the EU

If something goes wrong with goods or services you've bought from an EU-based seller, your route to recourse isn't particularly straightforward now that the UK has left the EU.

If you'd like to make a return, you'll need to complete a customs declaration form, CN22 or CN23, to include the item's description, weight and value. The customs charge is paid for by the recipient upon delivery.

Seeking a refund on the VAT and import charges paid may be difficult though. To claim a refund on customs duties for goods that you have returned you'll need to complete a C285 form, or a C1179 for a returned faulty item.

Should something go wrong with your order then Section 75 of the Consumer Credit Act continues to apply for all purchases made on a credit card.

If your complaint is not resolved and you need to escalate a dispute with an EU seller then you might come across some costly challenges. Previously, when the UK was a member of the EU, you could take the seller to court in the UK, but now you'll have to escalate matters at a court in their country.

Which? has written to the government to raise these outstanding issues and seek clarity on them.

This story was originally published in February 2020. It is regularly updated with the latest information.