Changes to Duty Rates in 2021 and the boost for business it brings.

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Brexit and all the impending changes that are expected to come with it have understandably taken a back seat over recent months. But as a shipping business dealing with imports and exports from across the globe daily, RIF Group is keeping a watchful eye on any future developments.

One of these is the changes to Import Duty.

Let us take a moment to look at where things currently stand:

Import Duty is payable on all imports from outside the EU at the time of

import (via Customs Clearance), and UK Import Duty rates are the same as Import Duty rates at all EU countries (via our membership of the EU), differing according to the product being imported.

Fast forward to when the UK leaves the EU on 31st December 2020… The final frontier! It’s all change! We’re no longer bound by EU trade laws and are free to set our own international trade laws (including Duty rates).

So, what happens then?

Just a few weeks ago in May the UK government confirmed that from 1st January 2021 Import Duty rates will be as per the UK Global Tariff.

What does that mean?

The bottom line is that with the proposed abolition of import VAT and the adjustment to the Global Tariff, your business could benefit from gaining more on your bottom line – without doing anything differently.

At a time when good news has been scarce, this announcement is a welcome one for many businesses.

Here’s a quick breakdown of some of the key changes:

  • All tariffs below 2% removed
  • No tariffs increased, and the majority reduced
  • Toys reduced from 4.7% to 4%
  • Most 2.7% Duty rates have gone or reduced to 2.2%
  • Most clothes/footwear unchanged
  • Vehicles duty unchanged but parts duty reduced

Here’s how it might look in practice:

Your business imports £50,000 of clothing from China. Before 2021, you have 2 payments to make to the UK government:

  1. Import Duty = £6,120 (made up of £1,000 for freight and 12% duty added to the total cost).
  2. Import VAT = £11,300 (20% of £50k goods + £6,120 Duty + £500 for UK Charges).

Put the two together and you’re paying a whopping £17,420.

But along comes 1st January 2021, and it’s all change… For the better for many businesses! The proposed changes mean that your TOTAL Import Duty + Import VAT could be only £6,120.

The more you import, the more you save each time… you do nothing differently but each time you end up with more profit for your business. 

Big thumbs up!

It’s worth bearing in mind that there are a few exceptions to this:

  • Where an exception applies, such as a relief or tariff suspension
  • the goods come from countries that are part of the Generalised Scheme of Preferences
  • the country you’re importing from has a trade agreement with the UK

Times are tough out there, and for the shipping & supply chain industry which has largely gone ‘under the radar’ due to the coronavirus pandemic, this boost for business is news worth shouting about.

RIF is licensed to take care of all these changes for our clients, and as always, we’re playing our part in helping our clients stay one step ahead of the competition – on 2020 and beyond.

If you’d like to know more about what this means for your business and how we can help please get in touch via Info@rifworldwide.co.uk