What are Excise And Customs Duties in the UK?
Excise and customs duties are two types of taxes levied on goods when brought into the UK. these taxes are purposed to raise revenue for the government and protect local industries from foreign competition. This blog post will discuss what excise and customs duties are and how they are calculated. We will also provide a detailed explanation of how these taxes apply to different types of goods.
Excise duty is not the same as a Sales Tax or VAT (Value Added Tax) in several cases, such as
- It is charged on a specific good rather than all goods and services.
- It is often referred to as an ‘indirect tax’ because the consumer does not usually see the excise duty that they are paying.
- The amount of excise duty payable on a product is often based on its weight or volume rather than its value.
- The manufacturer or importer pays the excise duty of the product rather than the consumer.
VAT is a type of consumption tax placed on a product whenever the value is added either at a production stage or at the point of retail sale. Clear House Accountants provide comprehensive VAT services to cater to your every VAT need.
What is Excise Duty in the UK?
Excise duties are taxes imposed on certain goods considered harmful to public health or the environment. These goods include tobacco, alcohol, and gasoline. The amount of excise duty payable on these goods is based on their weight or volume. For example, a pack of cigarettes will attract a higher excise duty than a bottle of wine.
However, excise duty in the UK is a tax levied on certain goods deemed harmful to public health or the environment – such as tobacco and alcohol – which are taxed according to weight or volume. Meanwhile, customs duty in the UK is a tax levied on goods imported from foreign countries, with the amount payable based on value.
It’s important to remember that both excise and customs duties are separate from VAT, which is applied to all goods and services sold in the UK according to value.
Excise duty rates vary according to the type of product being imported, with tobacco typically having a higher rate than clothing. In most cases, both excise and customs duties are payable when the goods are bought from a foreign country.
It is crucial to realize that the money raised through the excise duty may be utilized to address specific social causes related to the product or the service on which it is imposed. For example, tobacco tax revenues might be spent on the government anti-smoking campaigns or healthcare for cancer etc.
In the UK, the following forms of excise are levied on goods and services:
- Alcohol duty
- Air Passenger Duty
- Aggregates Levy
- Bingo Duty
- Climate Change Levy
- HGV Road User Levy
- Hydrocarbon Oil Duty
- Landfill tax
- Machine Games Duty
- Tobacco Duty
- Vehicle Excise Duty
- Betting and gaming duty
- Fuel duty
- Tobacco products duty.
These are all indirect taxes, which means that the consumer does not usually see the excise duty that they are paying. The amount of excise duty payable on a product is often based on its weight or volume rather than its value – though this will vary depending on the specific good being taxed. Excise duty is paid by the manufacturer or importer of the product rather than the consumer.
What is Custom Duty in the UK?
Customs duties are taxes that are imposed on goods that are imported into the UK from foreign countries. The customs duty payable on an imported good is based on its value. For example, a dress that costs £100 will attract a customs duty of £20.
Excise and Customs Duty; what’s the difference between both?
The rate of both excise and customs duty can vary depending on the type of good that is being imported. For example, the rate of excise duty on tobacco is higher than the rate of customs duty on clothing.
In most cases, both excise and customs duties are payable when the goods are bought from a foreign country. However, as mentioned before, there are some exceptions to this rule – one example being if alcohol or tobacco products are bought from another EU country where no excise duty is required to be paid.
It’s important to remember that both types of taxes are separate from Value Added Tax (VAT), a tax levied on all goods and services sold in the UK. VAT payable on a good or service depends on its value. For example, a dress that costs £100 will attract a VAT of £20.
However, If you want a brief overview of Taxation in the UK, click here.
Tax and Customs for Goods Sent from other countries:
If you’re receiving commercial goods in the UK from other countries, you need to make sure that it is legally allowed in the UK and that you pay the proper tax and customs charges.
You’ll have to:
- get an EORI number if you don’t already have one
- classify your goods using the UK’s commodity codes
- calculate how much duty and VAT you’ll need to paycheck if you need an import licence
- You may also have to get your goods inspected on arrival in the UK.
When your goods arrive in the UK, the freight forwarder will contact HMRC on your behalf to provide the basic information about the consignment.
Banned and Restricted items In the UK
Banned and Restricted Goods are those items you cannot bring into the United Kingdom, and in case you do, they will be seized by the government, whereas you will be fined as per the law. These include items such as
- counterfeit goods
- Rough diamonds
- endangered animal products
- Indecent and obscene materials.
- Weapons and Self-Defense items such as pepper spray and CS gas.
- Personal imports of meat and dairy products from most non-EU countries.
- Food and plant products if they aren’t free from pests and diseases
- Goods or items suspected of infringement, i.e. pirated copies of movies and music.
- Firearms, explosives and ammunition, unless you have a special license to bring them to the UK.
Excise Duty on the Items in the United Kingdom:
If you are sent alcohol or tobacco from outside the European Union, you will be charged Excise Duty on the items as per the current rates. If it is sent from the European Union, excise duty will be included in its price; on the other hand, your product will be seized if not sent from the EU.
Alcohol or tobacco items will be seized in case they are:
- Spirits are over 35 centilitres without a UK duty stamp.
- Cigarettes or hand-rolling tobacco without UK health warnings or fiscal marks.
There are different tobacco duty rates on different tobacco items such as cigarettes and cigars.
|Cigarettes||16.5% of the retail price plus £4.16 on a packet of 20|
|Cigars||£2.59 on a 10g cigar|
|Hand rolling tobacco||£5.24 on a 25g packet|
|Other smoking tobacco and chewing tobacco (eg pipe tobacco)||£2.85 on a 25g packet|
|Strength (ABV||Beer Duty Rate Per Litre for each % of Alcohol|
|More than 1.2%, up to 2.8%||8.42 pence|
|More than 2.8%, up to 7.5%||19.08 pence|
|More than 7.5%||24.77 pence|
|More than 1.2%, up to 2.8%||8.42 pence|
For example, if you buy a pint of 8% strength lager beer, ultimately, the beer duty you will pay is 24.77 pence * 8.0 = 198.16 pence per litre.
Cider duty is paid on cider and perry, and it depends on its strength and whether it is still or sparkling.
|Type of cider||Strength (ABV)||Rate per litre|
|Still||More than 1.2%, up to 7.5%||40.38 pence|
|Still||More than 7.5% but less than 8.5%||61.04 pence|
|Sparkling||More than 1.2%, up to 5.5%||40.38 pence|
|Sparkling||More than 5.5% but less than 8.5%||279.46 pence|
Spirit duty is £28.74 per litre of pure alcohol. For example, the spirit duty on a 1-litre bottle of 40% ABV vodka is 40% of £28.74, i.e. £11.50.
Payable wine duty depends on the strength of the wine, still or sparkling—also, wine duty with more than 22% ABV at the same rate as spirits.
|Type of Cider or Perry||Strength (ABV)||Rate per litre|
|still||More than 1.2%, up to 4%||88.93 pence|
|still||More than 4%, up to 5.5%||122.30 pence|
|still||More than 5.5%, up to 15%||288.65 pence|
|still||More than 15%, up to 22%||384.82 pence|
|Sparkling||More than 5.5% but less than 8.5%||279.46 pence|
|Sparkling||More than 8.5%, up to 15%||369.72 pence|
Fuel Duty rates:
Fuel duty depends upon the type of fuel:
|Type of Fuel||Rates|
|Petrol, diesel, biodiesel and bioethanol||57.95 pence per litre|
|Liquefied petroleum gas (LPG)||31.61 pence per kg|
|Natural gas used as fuel in vehicles, eg biogas||24.70 pence per kg|
|‘Fuel oil’ burned in a furnace or used for heating||10.70 pence per litre|
Gambling Duty Rates:
|Type of gambling||Duty||Rate|
|Casino games||Gaming Duty||Between 15% and 50%, depending on how much money the casino makes|
|Normal betting at a bookmaker’s||General Betting Duty||15%|
|Financial spread betting||General Betting Duty||3%|
|Other types of spread betting||General Betting Duty||10%|
|Pool betting (eg football pools)||Pool Betting Duty||15%|
|National Lottery tickets||Lottery Duty||12%|
|Fruit or quiz machines with a prize of up to £10 that cost up to 20 pence to play||Machine games duty||5%|
|All other fruit or quiz machines||Machine games duty||20%|
|Online or telephone gambling||Remote Gaming Duty||15%|
Insurance Premium Tax:
In the United Kingdom, Insurance Premium Tax (IPT) is a type of value-added tax levied on general insurance premiums. The standard rate of IPT is 12%, with a reduced rate of 0% for travel insurance and a higher rate of 20% for some other insurance contracts.
Air Passenger Duty (APD):
Air Passenger Duty (APD) is a tax levied on the passengers of UK-registered aircraft and certain other flights departing from airports in the UK. The amount of tax payable depends on the destination of the flight, the class of travel, and the age of the passenger.
Customs Duty on the items in the UK
Customs duty is charged on the items imported from a foreign country except for European Union. Also, custom duty is charged if those products are above a certain value, including the price paid for the goods and posting, packaging and insurance.
|Type & Value of Goods||Customs Duty|
|Anything under £135||No charge|
|Gifts worth £135 – £630||2.5%, but rates are lower for some goods.|
|Gifts above £630 and other goods above £135||The rate depends on the type of goods and where they came from.|
Jibran Qureshi FCCA is the Managing Director of Clear House Accountants and has over 13 years of experience in practice across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. This dexterity led him to be Enterprise Nation’s Top 50 Advisors. Jibran recognised the need to manage the innovative disruptions sustainably early on and shaped Clear House Accountants not just to be compliance specialists but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive.
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