Receiving a Gift from Abroad - And How You Can Get Taxed On It
Posted: Friday, January 08, 2010
by Keira Benson
In the run-up to Christmas, I learned that sending a gift to the UK from abroad is not as simple as it sounds.
A friend had to pay out a whopping extra 20 in VAT and customs clearance fees in order to release a Christmas gift from her friend in the States which was being held at the local postal depot.
Apparently, gifts sent as packages from the US are examined by Customs officials there and can be sent to the UK free of Duty and VAT only if they comply with these rules:
* Packages must be correctly declared.
* They must have been sent by a private person abroad to another private person in Britain.
* The gift must be for the use of either yourself or your family.
* There is no commercial or trade element.
* Any alcohol, tobacco products, perfumes or toilet waters are within the Customs allowances and costs (see above).
* They must be of an occasional nature only, such as a birthday or anniversary.
Basically, for anyone sending gifts to the UK from outside the European Union, this is what you need to know:
Any goods imported into the UK over the value of 18 are liable to import VAT; gifts between private individuals over the value of 40 are also liable for VAT. Goods and gifts over these values may also be liable for Customs duty. As of the 1st of December 2008 you will no longer be required to pay customs duty for goods up to the value of 135, however you will still be required to pay import VAT and excise duty where applicable.
Customs duty is a tax charged on goods produced outside the EU. It is controlled by HM Revenue & Customs. The purpose of Duty is to keep competition equal and fair and to bring the cost of imported goods up to the same cost as those produced within the EU. Once duty is paid, the goods are in 'free circulation' and can move throughout the EU without restriction.
Certain goods such as wines, spirits, cigars, cigarettes and tobacco are subject to what is called excise duty. When you buy excisable goods in the UK the price you pay includes this tax. However, if you import these goods either from the EU or from outside the EU, you will have to pay Excise Duty and VAT on them. The Excise Duty is often more than the cost of the goods, and private consumers buying excisable goods over the Internet should be extremely careful as there are different regulations governing the purchase of these goods on the Internet.
Value Added Tax (VAT) is a tax normally charged on the supply of goods (and services) made by a VAT registered business. However, imported goods are also subject to VAT. This is to prevent a purchaser gaining an unfair advantage by buying non-EU goods VAT free..
It is possible for the sender to pay these charges in advance or in retrospect but no parcel will be released, unless the fees have been paid. The sender should also ensure that the appropriate customs forms have been properly completed or further delays and additional charges could ensue.
Unpaid parcels, resulting from disputes about Customs charges, cannot be delivered and will be returned to sender if they have been held at the depot for more than 20 days.
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Top-level comments on this article: (1 total)This is great information especially for those of us, including myself, who know nothing about Customs & taxes process and how they operate within the UK.
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