There are many reasons that importing from the US might make good sense for your business. The USA is one of the UK’s biggest trading partners, with huge volumes of goods moving between the countries every month. In fact, in 2017, $56.3 billion of exports from the US arrived in Britain, somewhere in the region of 3.5 per cent of all of the exports leaving America.
Importing can be complex, but don’t panic – this guide is here to help.
Requirements for importing from USA
If you’re planning on importing from the USA to the UK, there are a few things you’ll need to prepare in advance, including:
- Commodity codes – used by customs authorities to identify the goods you’re bringing into the country, to ensure the correct tax and duty is paid, and all legal and safety regulations are followed
- Import license – there are a lot of different types of goods which require an import license. You’ll definitely need one if you’re importing anything which is hazardous, or could be used for military purposes, and usually if your shipment includes live animals or plants
- EORI number – this is needed by any individual or business importing into the UK. You can get your EORI number within just a few days by registering online with the UK tax authorities
- Customs declaration – if you’re using a customs broker or freight forwarder you might find that they complete some or all of the customs processes on your behalf. You’ll use a form called C88 or SAD – the single administrative document
US to UK import tax
When importing from the US to the UK, you’ll need to pay duty and VAT on your goods. Exactly what you owe will depend on the type of products you’re importing. Because it’s a relatively complex system, many importers prefer to have a freight forwarder or customs broker help them calculate the costs of importing.
Duty on US imports
The duty payable varies depending on the goods you’re bringing into the UK. To know what duty rate is applied, you’ll need to get the commodity code for your goods. You can find these on the UK government website, which has a lookup tool to help you select the correct code.
When you declare your goods to customs in the UK, you’ll be asked to confirm the commodity code, which will be used to calculate the duty payable. Amounts vary quite significantly. If you’re importing women’s cotton shirts from the US, for example, the duty is set at 12 per cent, certain types of new cars come with 10 per cent duty, while some electrical goods may incur a zero rate of duty.
Your goods will be held at UK customs pending payment of duty and VAT. Once this has been paid – either by yourself or a freight forwarder or customs broker on your behalf – they’ll be released.
Paying VAT on goods from US
As well as duty, you’ll need to pay VAT on items imported to the UK. It’s important to remember that VAT is calculated on the cost of goods, + the cost of transport + duty paid. It’s charged at the prevailing UK rate which is currently 20 per cent.
Tip: If you’re buying goods from a supplier in the US, specifically for import to the UK, you should not pay US VAT. VAT will be charged upon import to the UK only. However, if your supplier adds VAT to your US invoice, it can be hard to reclaim it once paid.
US to UK import tax examples
To calculate the amount of duty and tax payable, you’ll first need to convert the price paid to GBP, using the UK customs exchange rate, which is changed from time to time and can be found online.
Here’s a basic example of how duty and VAT might be calculated for an import to the UK.
For the purpose of this calculation, we have split out the cost of goods and transport. In some cases, however, the deal you strike with your supplier in the US might include shipment to the UK. In that case, the duty is calculated on this cost, without needing to add in a separate shipment fee.
|Shipment 1||Shipment 2|
|Cost of goods||£1,000||£1,500|
|Cost of transport||£350||£700|
|UK duty||UK duty @ 3.5% on total costs of
goods + transport – £47.25
|UK duty @ 3.5% on total costs of goods + transport – £77|
|VAT||VAT @ 20% on total cost of goods + transport + duty – £279.45||VAT @ 20% on total cost of goods + transport + duty – £455.40|
Best way to pay for goods from the US
Importing goods and services from the US to the UK can be costly. Some of the charges are unavoidable. But others can be avoided, if you do a bit of research.
While many assume banks are the best way to pay overseas invoices, it could be up to eight times cheaper to find an alternative service such as TransferWise. Traditional banks could charge higher fees – and even if they advertise low fees, they could add a margin to the exchange rate to make the transfer more expensive for you.
TransferWise does things different. Each time you use them to make an International money transfer they’ll give you the real, mid-market exchange rate – the one you’d find on Google. All you’ll pay is a small, transparent fee. The service is regulated by the FCA and has over 3 million customers.
In addition, if you’re regularly dealing in different currencies, the TransferWise multi-currency Borderless account could help you save even more. It lets you keep your cash in over 40 different currencies. So you can get paid into your account with no receiving fees, and switch between currencies instantly to pay invoices.
Sea or air freight from the US to the UK?
Whether air or sea freight will be your best choice depends largely on what you’re shipping, and when you need it.
Typically, for large volume goods such as clothing or consumer goods, sea freight is a much cheaper option – but this mode of transport takes time.
Air freight is much quicker, but the relative costs are high – it’s a better choice for smaller loads (under about 100kg), high value items, or things needed urgently.
|Sea freight||Air freight|
|Shipping options||FCL – full container load – in which your shipments takes a whole 20 or 40ft container
LCL – less than container load – sharing container space with other shipments
Other options available for commodities such as metals, aggregates and dry foodstuffs
|Consolidated freight – consols – where one flight contains many small shipments
Direct or charter flights in which a single plane is used for a single shipment – this is a very costly option
|Costs||Costs calculated based primarily on load volume, with type and value of cargo also considered.
Shipping a 40ft container of low value apparel from Florida to London will cost $1400-$1550
|Costs calculated on load weight and size, with value also considered.
Air freighting a 50kg of low value general merchandise from Florida to London will cost $380-$420
|Time for delivery||US East Coast – 10 to 14 days on the water
US West Coast – 30 days on the water
|Flight time is only a few hours – although consol shipments might take a few days before being assigned a plane|
|Best suited to||Large volume loads, typically over 100kg, where delivery times can be flexible||Small volume, high value or urgent loads|
How to import from the USA
There are a few basic steps you’ll need to take to make sure your goods reach the UK smoothly. In many cases, importers choose to have a freight forwarder or customs broker help with these processes. Although there might be a fee for this service, it can offer peace of mind and help you avoid any delays or nasty surprises.
Here are some of the things you will need to arrange at the UK end of your import:
- Get an EORI number, which will take three working days to arrive
- Find the right commodity code for your goods
- Check if you need an import license for your goods
- Declare your import to UK customs – or have a freight forwarder or customs broker do this for you
- Pay duty and VAT to have your goods released by customs authorities
Popular items imported from US to the UK?
The US is the biggest export market from the UK, with nearly 15 per cent of all exports from the UK going stateside. The US is the 4th biggest source of imports into the UK, after Germany, China and the Netherlands.
In 2017, the primary imports from the US to the UK were as follows:
- Civilian aircraft
- Chemicals and primary resources used for manufacturing
- Electronic equipment
Shipping goods around the world has never been easier, and importing from the US to UK can be a great way to grow your business. Getting clued up in advance can help, so you know exactly what the total costs of your import are likely to be. That way there are no nasty surprises, or unforeseen costs to worry about. By using these tips and ideas, you can manage your costs and protect your profits, to make sure your UK import business is successful.