What will your shipment actually cost?
The product price is just the beginning. Add shipping, insurance, import duty, VAT or customs tax, broker fees, and local delivery — and the true landed cost is often 30–60% above the invoice price.
What is the total landed cost including duty and VAT?
What duty rate applies to my product category?
Does my shipment fall below the de minimis threshold?
How much VAT will I pay on an import?
Is my product priced competitively after all import costs?
What is the duty on a £5,000 shipment from China?
Practical guide
How import duty, VAT, and landed cost stack up
Import duty is calculated on the Customs Value of the goods. In the UK and EU, Customs Value is the CIF value — Cost of the goods plus Insurance and Freight (shipping). This means your duty is calculated on the product cost plus shipping cost, not the product cost alone. If you pay £5,000 for products and £400 for shipping, duty is applied to £5,400.
After duty is calculated, VAT (in the UK: 20%) is applied to the CIF value plus the duty. So VAT is calculated on an already-larger base: (£5,400 + duty). This stacking effect means the total additional cost on an international shipment is higher than either duty rate or VAT rate alone suggests.
De minimis thresholds determine whether duty and VAT apply at all. In the UK, commercial goods from outside the UK above £135 are subject to import duty and VAT. Below £135, the exporter is expected to collect UK VAT at source. In the US, the de minimis threshold is $800 — shipments below this value are not subject to federal duties (though state taxes may still apply). These thresholds change and vary by country; always verify current rules.
Duty rates depend on the commodity code (HS code or UK Trade Tariff code). The same physical product can attract different rates depending on its code classification, country of origin, and any applicable trade agreements. UK-China goods typically attract full duty rates. UK-EU goods have zero duty under the UK-EU Trade and Cooperation Agreement for goods meeting rules of origin requirements. Always verify the specific HS code for your product before placing a large order.
Worked example
See it in action
Scenario: Importing £4,500 of consumer electronics from China to the UK
- 1Product cost: Manufacturer invoice: £4,500.
- 2Shipping and insurance: Sea freight: £350. Insurance: £50. Total shipping and insurance: £400.
- 3CIF value (Customs Value): Product £4,500 + Shipping & Insurance £400 = CIF value: £4,900.
- 4Import duty: Electronics from China: 3.5% duty rate (varies by HS code). Duty: 3.5% × £4,900 = £171.50.
- 5VAT on import: UK VAT at 20% on (CIF + duty): 20% × (£4,900 + £171.50) = 20% × £5,071.50 = £1,014.30.
- 6Total landed cost: Product: £4,500 + Freight: £400 + Duty: £171.50 + VAT: £1,014.30 + UK customs/broker fee: £150 = £6,235.80.
Result
A £4,500 product order has a true landed cost of approximately £6,235 — 38.6% above the product invoice price. If you are a VAT-registered business, you can reclaim the £1,014 import VAT, reducing the true incremental cost to approximately £5,221 (16% above invoice). This makes VAT registration highly valuable for regular importers.
Watch out
Common mistakes to avoid
Calculating duty on product cost only — duty is applied to CIF value (product + shipping + insurance).
Forgetting that VAT on import is charged on top of the duty — not on the product price alone.
Assuming de minimis exemption applies — thresholds differ by country and change frequently.
Not checking the correct HS code — the same product can attract 0% or 12% depending on classification.
Ignoring customs broker fees — for commercial shipments, these add £50–£250+ per shipment.
Not accounting for local VAT registration requirements when selling direct to consumers in other countries.
Before you decide
Decision checklist
Have you checked the correct HS code (commodity code) for your product?
Have you calculated duty on CIF value (product + shipping + insurance), not product cost alone?
Have you added VAT to the CIF + duty total (not just to the product cost)?
Is your shipment above or below the de minimis threshold for your destination country?
Are you VAT-registered and therefore able to reclaim import VAT?
Have you added customs broker fees to your landed cost estimate?
Frequently asked questions
What is CIF value and why does it matter for customs?
CIF stands for Cost, Insurance, and Freight. It is the basis on which customs duty is calculated in the UK, EU, and many other jurisdictions. CIF = product invoice price + shipping cost + insurance. If you pay £3,000 for goods and £250 for shipping, your CIF value is £3,250, and duty is applied to £3,250 — not £3,000. This often surprises importers who assume duty is applied to the product cost alone.
What is the UK import duty threshold?
For commercial goods sent from outside the UK to a UK address, import VAT and duty apply on consignments with a customs value above £135. Below £135, the seller is supposed to collect and remit UK VAT at point of sale. The £135 threshold applies to the customs value of the shipment, not the per-item price. Duty rates above the threshold depend on the commodity code.
Can I reclaim import VAT?
Yes, if you are VAT-registered in the UK. Import VAT paid at the border can be reclaimed on your VAT return as input tax in the same way as domestic VAT on purchases. This makes VAT registration valuable for businesses that regularly import. Non-VAT-registered businesses (turnover below £90,000 or opted out) cannot reclaim import VAT — it is a genuine cost.
How do I find the duty rate for my product?
UK duty rates are found on the UK Trade Tariff (gov.uk/trade-tariff). Look up your product by description to find the commodity (HS) code, then check the applicable duty rate for the country of origin. Rates vary by country — UK-China rates differ from UK-EU rates. For the EU, use the EU TARIC database. For US imports, check the HTS (Harmonized Tariff Schedule) at the US International Trade Commission.
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