Import VAT: What You Pay Bringing Goods Into the UK

Quick answer: Import VAT is the VAT charged when goods enter Great Britain from outside the UK (or Northern Ireland from outside the UK and EU). It uses the same rates as domestic VAT — 20%, 5% or 0% — but it is worked out on a special import value: the customs value of the goods plus shipping, insurance, packaging and any customs duty, not just the price you paid. Goods worth £135 or less have the VAT collected by the seller at checkout instead, and genuine gifts worth £39 or less arrive free of both VAT and duty.

What import VAT actually is

Import VAT is not a separate tax with its own rates. It is ordinary UK VAT, charged at the border instead of at the till. When goods are imported into Great Britain from outside the UK — or into Northern Ireland from outside the UK and the EU — they are treated as supplied here, so VAT applies at the standard rate (20%), the reduced rate (5%) or the zero rate (0%), exactly as if you had bought them from a UK shop.

The distinction that matters is between import VAT and customs duty:

• Import VAT is a percentage of the value of the goods. If you are VAT-registered, it is normally reclaimable as input tax — a cash-flow event, not a permanent cost.
• Customs duty is a separate customs charge set by commodity code and country of origin — a permanent cost you never get back.

Since Brexit, goods from the EU are imports too — the same rules apply as for China, the US or anywhere else. (Goods moving between the EU and Northern Ireland are the exception: they remain acquisitions under the Windsor Framework.)

How the amount is worked out

This is where importers most often go wrong, because the value VAT is charged on is bigger than the invoice price. HMRC's guidance (updated October 2026) says the value for import VAT is:

customs value of the goods + incidental expenses up to the first UK destination + any customs duty payable + any excise duty or other charges payable (but not the VAT itself)

What counts as "incidental expenses"

• Commission (but not "buying commission" — that is a separate service, handled under the reverse charge)
• Packing, transport and insurance up to the first UK destination — the place named on the consignment note (say, your warehouse in Birmingham even if the goods landed at Dover)
• If a further UK destination is known at import, transport costs there too
• Clearance charges, quay rent, entry fees, demurrage, handling, loading and storage

Foreign-currency prices must be converted to pounds sterling using HMRC's official conversion rules. If no value can be established, goods can be released against a security (a deposit or bank guarantee) while the value is agreed.

Declaring every actual incidental cost is not always practical, so HMRC allows three approaches (rates refreshed in the October 2026 guidance update):

Method 2 rates (UK incidental expenses, October 2026):

If HMRC later finds the actual-cost import VAT would have been higher than declared under Method 2, it only collects the arrears from unregistered or partly-exempt importers.

Worked example: components from China

A Leeds manufacturer imports electronic components:

• Invoice price of the goods: £2,000
• Shipping and insurance to Leeds: £180
• Customs duty at 4%: £80
• Value for VAT: £2,000 + £180 + £80 = £2,260
• Import VAT at 20%: £2,260 × 0.20 = £452

The £452 is paid at the border (or accounted for on the VAT return — see paying options below). Because the business is VAT-registered and uses the components to make taxable supplies, the £452 goes straight back into its VAT return as input tax. The £80 duty is gone for good. Note how duty was added before VAT was calculated — duty increases the VAT bill too:

• Jacket from China: £500 + £50 postage = £550
• Duty on clothing at 12%: £550 × 0.12 = £66
• Value for VAT: £550 + £66 = £616
• Import VAT at 20%: £616 × 0.20 = £123.20

The same £500 spent on a laptop — which usually attracts no duty — would cost just £110 of VAT.

The £135 rules: who collects the VAT

Goods worth £135 or less, bought by you (not excise goods):

• The overseas seller must include UK VAT in the price at checkout — nothing extra should arrive at your door.
• On a marketplace, the marketplace is treated as the seller and accounts for the VAT.
• Business buyers who supply their UK VAT number are not charged; they account for the VAT on their own return.
• The government announced in June 2026 that this £135 relief will be withdrawn (reported as effective 1 October 2028) — nothing changes yet.

Goods worth more than £135:

• Normal import VAT and customs duty apply at the border, collected by the delivery company before delivery or on collection — charged on the total package value: goods + postage + packaging + insurance + any duty owed.

Excise goods (alcohol, tobacco, certain energy products) sit outside the £135 rules entirely: duty and VAT apply at any value.

Worked example: £120 of bike parts from the US

You order £120 of parts from an American seller (non-excise goods, under £135). The seller should charge you £24 of UK VAT (20%) at checkout, making your total £144 — the parcel arrives with no further charges. If a delivery company asks you for VAT on arrival, check with the seller before paying.

Gifts: the £39 relief

Gifts follow different rules. A genuine gift worth £39 or less, sent between private individuals for a personal occasion, arrives free of customs duty and import VAT. Above £39 the recipient pays VAT to the delivery company before release (perfume, toilet waters, alcohol and tobacco have their own limits), and above £135 duty becomes payable too. A parcel labelled "gift" that is really a sale is still a sale — and excise goods sent as gifts attract duty at any value.

Example: your aunt posts £80 of clothing from the US (£25 postage). Gifts over £39 do not qualify, so before the courier releases the parcel you pay £21 of VAT — (£80 + £25) × 20% — plus the courier's admin fee.

How you actually pay it

• Courier or carrier collects it: For most parcels, the delivery company pays HMRC on your behalf and bills you before release — plus an admin or clearance fee, commonly £8–£15 per parcel, which can dwarf a small VAT bill.
• Duty deferment account: Regular importers defer duty and VAT to a monthly direct debit instead of paying per shipment.
• Postponed VAT accounting: Since 1 January 2021, VAT-registered importers can account for import VAT on their VAT return (Box 1 output, Box 4 input, Box 7 net) instead of paying at the border. No separate application is needed; the figures come from the monthly import VAT statements in your customs digital account.

If you are paying import VAT at the door on large regular shipments, the return-based route is almost always better for cash flow — how to pay VAT covers all of HMRC's payment methods in detail.

Reclaiming import VAT

If you are VAT-registered and the imported goods are for your business, import VAT is reclaimable as input tax — just like VAT on a UK supplier's invoice. You need evidence: the C79 import VAT certificate (issued monthly, for VAT paid at the border) or your monthly import VAT statements (from your customs digital account, for postponed accounting).

Keep the evidence for at least 6 years. The reclaimed VAT goes in Box 4, the net import value in Box 7 — how to file a VAT return walks through all nine boxes.

A few traps:

• Not registered? No reclaim. You cannot claim import VAT without a VAT registration — though goods bought in the 4 years before registering can sometimes be reclaimed once you register.
• Zero-rated goods are still declared. Children's clothes, books and most food attract 0% import VAT, but the declaration is required — and customs duty may still apply.
• Art, antiques and collectors' items get a reduced valuation at import, giving an effective VAT rate of 5%.
• Importing does not count towards the £90,000 registration threshold — goods imports are not taxable supplies for this purpose (though overseas services under the reverse charge do count). See when to register for VAT for the tests.

Northern Ireland: a different map

For VAT purposes, Great Britain and Northern Ireland are not the same place. Goods moving from the EU into Northern Ireland are acquisitions, not imports, under the Windsor Framework — the import VAT rules in this article do not apply to them. Goods coming into Northern Ireland from outside the UK and the EU are imports and follow the same rules as Great Britain.

FAQs

The bottom line

Import VAT is the same tax you already know, collected at a different point. The three things that decide your bill are the value it is charged on (price plus freight, insurance, packing and duty), the £135 boundary that shifts collection from the border to the checkout, and whether you are registered to reclaim it. Get those right and importing is a cash-flow exercise, not a surprise bill.

Educational information and estimates. These tools do not submit VAT returns or determine the treatment of a specific transaction.