What is import VAT?

Definition of import VAT

Import VAT is a tax that is payable on goods that are imported into the United Kingdom from another country. Import VAT is often payable in addition to customs duty.

Businesses will almost always have to pay import VAT and customs duty if they import goods either into Great Britain (i.e. England, Scotland or Wales) from outside the UK or into Northern Ireland from outside the EU.

How much is import VAT?

Import VAT is usually charged at the rate of VAT that would have applied to the goods if they had been purchased in the UK. Some goods, such as works of art, antiques and collectors’ items, are subject to a reduced rate of VAT. HMRC provides more information about when businesses can pay a reduced amount of import VAT and customs duty on its website.

Can you claim import VAT back from HMRC?

HMRC will sometimes allow businesses to reclaim the import VAT they pay on goods imported into the UK.

VAT-registered businesses can use the postponed VAT accounting method to declare and pay import VAT. Under this method, the payment of import VAT is postponed until the business completes and files its VAT return. Businesses that use this method may be able to reclaim the VAT as input tax on the same VAT return.

Alternatively, a business can choose not to wait until its VAT return date to pay import tax and can pay import VAT at the point of importation instead. The business may then be able to reclaim the import VAT as input tax on its VAT return, subject to the normal rules for reclaiming VAT. HMRC provides more information about accounting for import VAT on its website.

Businesses that are not registered for VAT are unable to reclaim import VAT.

Accounting for import VAT with FreeAgent

FreeAgent customers can use the software to record transactions with businesses outside the UK and account for import VAT.

Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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