Guides / Duty and VAT calculation · Updated 30 September 2026

How import duty and import VAT are calculated in Great Britain

Duty first on the customs value, then import VAT on value plus duty. Here is each step, which costs belong where, and how a UK–EU origin claim changes the result.

This guide is also available in Polish.

Import duty and import VAT are two separate charges, worked out in a fixed order. Duty is calculated first on the customs value of the goods. Import VAT is then calculated on a larger figure that includes that duty. If you get the order wrong, or leave a cost out of the value, the declaration is wrong, even if every rate you used was right.

Step 1: find the commodity code

Every rate starts from the commodity code. HMRC describes commodity codes as internationally recognised reference numbers that describe a specific product. Only the first six digits are shared worldwide; the digits after that carry UK-specific detail.

Once you have the code, the UK Trade Tariff shows what applies to it: the Customs Duty rate, the import VAT rate, any other taxes, preferential rates under trade agreements, and measures such as licensing, anti-dumping duties, safeguards and tariff quotas. The rate can differ by country of origin, so always check it against where the goods originate, not just where they were shipped from.

A wrong code means a wrong duty rate, a wrong VAT rate and possibly a missed licence. If classification is not obvious, HMRC suggests using a customs representative. You can also read our guide to Advance Tariff Rulings.

Step 2: work out the customs value

Duty is charged on the customs value, not simply the invoice price. HMRC sets out six valuation methods. The main one is the transaction value, based on the price paid or payable for the goods. The others (identical goods, similar goods, deductive, computed and fall-back) are only used when the transaction value cannot be.

Delivery costs matter here. HMRC guidance says you must include transport and insurance costs up to the place where the goods are introduced into the UK, and only up to that point. The place of introduction depends on how the goods travel:

Sea: the UK port of importation.
Air: the point where the UK border is first crossed.
Road or rail: the customs office point, typically the UK border crossing.
Post: the delivery address.

Freight, loading, handling, container charges and insurance against loss or damage in transit up to that point all belong in the value. Costs incurred after the goods reach that point can generally be left out or deducted from the customs value.

Step 3: check whether a preferential rate applies

Goods from the EU do not automatically enter Great Britain duty-free. Under the UK–EU Trade and Cooperation Agreement (TCA), a preferential rate is only available for goods that originate in the partner country and meet the agreement's conditions. Goods made in a third country and merely shipped through the EU are not covered just because they came from an EU warehouse.

To claim the preference, the importer needs one of two proofs of origin under the TCA:

a statement on origin, made out by the exporter, stating that the product is originating; or
importer's knowledge, where the importer holds supporting documents or records showing the product qualifies as originating.

The claim is normally made on the import declaration itself. If it is missed, GOV.UK says a claim can be made after importation, as long as it is made within 3 years of the importation date and comes with a valid proof of origin. Without a valid claim, the full rate for that commodity code applies.

Step 4: calculate the duty

For most goods with a percentage (ad valorem) rate, duty is the customs value multiplied by the rate shown in the Trade Tariff for that code and origin. Some goods carry specific duties, for example per kilogram, or additional measures. The Trade Tariff entry for the code shows these.

Step 5: calculate import VAT on value plus duty

This is the step most often done wrong. HMRC guidance says the value for VAT of imported goods is their customs value, plus:

incidental expenses such as commission, packing, transport and insurance incurred up to the goods' first destination in the UK;
any Customs Duty or levy payable on importation; and
any excise duty or other charges payable on importation, except VAT itself.

So the base for import VAT is larger than the base for duty in two ways. It includes the duty, and it can include transport beyond the border up to the first UK destination, which is excluded from customs value.

Worked example (illustrative numbers only)

The figures below are invented round numbers to show the order of the calculation. The duty and VAT rates are placeholders, not the rates for any real product. Look up your own code in the Trade Tariff.

Line	How it is worked out	Amount (GBP)
Price paid for the goods	From the invoice	10,000
Freight to the UK port	Up to place of introduction	500
Insurance in transit to the UK port	Up to place of introduction	100
Customs value	10,000 + 500 + 100	10,600
Duty at an example rate of 4%	10,600 x 4%	424
Haulage from port to the first UK destination	Added for VAT only	200
Value for VAT	10,600 + 424 + 200	11,224
Import VAT at an example rate of 20%	11,224 x 20%	2,244.80

If the same goods originated in the EU and a valid statement on origin or importer's knowledge supported a preferential claim at a lower rate, the duty line would fall. Import VAT would also fall slightly, because it is charged on a base that includes the duty. The goods still bear import VAT in either case.

Where this goes on the declaration

The commodity code, valuation method, origin, preference claim and tax lines all go on the import declaration in CDS. Our guide to the CDS import declaration explains who can submit it, and the cost guide covers what drives the overall cost of clearance. If you or your customers work in Polish, there is also a Polish-language duty and VAT calculator walkthrough (in Polish). Note that it looks at the calculation from the Polish side, so the VAT rate and rules there are Poland's, not Great Britain's.

Common mistakes

Using the invoice price as customs value and leaving out freight and insurance to the UK.
Calculating VAT on the customs value alone, without adding duty.
Assuming EU-shipped goods are zero-rated without checking origin and holding proof.
Choosing a commodity code by product name alone instead of checking the tariff notes.

Related guides

Prefer to read this in Polish?

Agencja Celna UK is a Polish-language customs guide for people moving goods between the UK and Poland, run by the same team as Easy Clearance. Its calculator walkthrough explains duty and VAT from the Polish side.

Open the Polish walkthrough

Sources

General information, not legal, tax or customs advice. Rules change; confirm current requirements on gov.uk or with a registered agent before you ship.