Calculating UK import duty for your upcoming shipment
In short
Before your next shipment leaves the supplier, you can lock in most of what decides your duty bill and landed cost: the incoterm, the commodity codes, proof of origin, who makes the customs declaration, how duty is paid and whether import VAT is postponed. This checklist takes UK eCommerce importers through each decision in order, including how to allocate freight across a mixed-SKU container.
Most of what decides your duty bill is fixed before the goods leave the supplier. The incoterm sets who pays freight and who is the importer. The commodity code sets the rate. The origin paperwork decides whether a preference applies, and your instructions to the agent shape the customs declaration. By the time the container is on the water, your options are narrower.
This is a practical checklist for your upcoming shipment, in the order you will need it. If you want the step-by-step maths of duty, import VAT and landed cost, read our companion guide on how to calculate UK import duty first, then come back to this one to plan the order.
Before you order: incoterms and quotes
Choose the incoterm deliberately
The incoterm on your purchase order decides who arranges and pays for each leg of the journey, and who is the importer of record. The common ones for eCommerce sellers are:
- EXW (Ex Works). You collect from the factory and handle everything, including export clearance.
- FOB (Free on Board). The supplier delivers to the vessel at the origin port. You pay sea freight and insurance and you import.
- CIF (Cost, Insurance and Freight). The supplier pays freight and insurance to the UK port. You import and pay duty and VAT.
- DAP (Delivered at Place). The supplier delivers to your address but you are still the importer and pay duty and VAT.
- DDP (Delivered Duty Paid). The supplier imports and pays duty and VAT.
DDP sounds simplest but carries a trap. If the supplier or their agent is the importer, the import VAT is theirs, not yours. You cannot reclaim it or use postponed VAT accounting, and you have little visibility of the commodity codes or values declared. Many importers prefer FOB, which gives control of freight cost and makes you the importer.
Get comparable quotes
Ask suppliers and forwarders to quote on the same incoterm so you can compare like with like. A cheaper unit price on EXW can easily cost more than a higher FOB price once collection and export clearance are added.
Classify every SKU before you order
Commodity codes should be agreed before the purchase order, not at the port. For each SKU, find the 10-digit import code on the UK Trade Tariff and note the duty rate, VAT rate and any other measures such as anti-dumping duty.
Do not rely on the supplier’s code. It is their export classification and only the first six digits are shared internationally. If a code is genuinely uncertain and the order is large, HMRC offers a binding Advance Tariff Ruling, but allow time, as HMRC says it replies in 30 to 120 days.
Get origin documents in place
If the goods could qualify for a preferential rate, the paperwork needs to be agreed with the supplier before shipping, not chased afterwards.
For goods from the EU, GOV.UK explains that you can claim preference using a statement on origin made out by the exporter, usually on the invoice, or using importer’s knowledge. A statement can cover a single shipment or multiple identical shipments for up to 12 months from the first import, and you must keep it for 4 years from importation.
For other countries, check whether the UK has a trade agreement or preference scheme that applies and what proof it requires. Remember that origin is where the goods were made under the rules, not where they shipped from.
Who makes your customs declaration: choosing an agent
Most sellers do not make their own customs declaration in the UK. A customs agent, freight forwarder or courier makes it on your behalf. When choosing one, ask:
- Will they act as your direct or indirect representative? This affects who is liable for the customs debt, and your written instructions must say which.
- Do they check your commodity codes or simply use what you give them? Either way, GOV.UK is clear that you remain responsible for due diligence on declarations made for you.
- How do they pay duty: through your duty deferment account, theirs, or at clearance, and what do they charge for it?
- Will they use postponed VAT accounting on your instruction, and do they confirm it in writing?
- What are their clearance, handling and disbursement fees, so you can include them in your landed cost?
You will need an EORI number to import into Great Britain, so make sure yours is registered and shared with the agent.
Duty deferment account vs paying at clearance
Duty has to be paid before goods are released, unless it is deferred. You have three main options.
| Option | How it works | Typical fit |
|---|---|---|
| Pay per consignment | The agent pays at clearance and recharges you, often with a fee | Occasional imports |
| Use your agent’s deferment account | Duty is deferred under the agent’s account with your authority, usually for a fee | Regular imports without your own account |
| Your own duty deferment account | You pay all duty in one monthly Direct Debit | Frequent or high-value imports |
According to GOV.UK guidance on duty deferment accounts, you need an EORI number and either a guarantee from a regulated UK financial institution or a guarantee waiver. GOV.UK describes a waiver route for up to £10,000 a month, with more financial information required above that. HMRC aims to process applications within 30 working days once it has everything. For declarations through the Customs Declaration Service, GOV.UK says payment is taken on the 16th of the following month.
Opt in to postponed VAT accounting
If you are VAT-registered, instruct your agent in writing to use postponed VAT accounting for this shipment. It means no import VAT is paid at the border. Instead it goes through your VAT return, and you download the monthly statement from the Customs Declaration Service. Our postponed VAT accounting guide covers the boxes and the pitfalls.
Budget landed cost across a mixed-SKU container
Duty is calculated line by line, on each SKU’s own code and value. Freight, insurance and clearance costs are usually invoiced once for the whole shipment, so you need to allocate them across SKUs to get a landed cost per unit.
The allocation basis matters more than most sellers realise. The table below is an illustrative example only, with invented figures: £2,800 of shared freight split across three SKUs in one container.
| SKU A | SKU B | SKU C | Total | |
|---|---|---|---|---|
| Units | 2,000 | 500 | 1,000 | 3,500 |
| Goods value | £10,000 | £15,000 | £5,000 | £30,000 |
| Weight | 1,000 kg | 500 kg | 2,500 kg | 4,000 kg |
| Volume | 10 cbm | 4 cbm | 14 cbm | 28 cbm |
| Freight by value | £933.33 | £1,400.00 | £466.67 | £2,800 |
| Freight by weight | £700.00 | £350.00 | £1,750.00 | £2,800 |
| Freight by volume | £1,000.00 | £400.00 | £1,400.00 | £2,800 |
| Per unit, by value | £0.47 | £2.80 | £0.47 | |
| Per unit, by weight | £0.35 | £0.70 | £1.75 | |
| Per unit, by volume | £0.50 | £0.80 | £1.40 |
SKU C is low value but heavy and bulky. Allocated by value, it carries £0.47 of freight per unit. Allocated by volume, which is what usually drives sea freight cost, it carries £1.40. If SKU C sells on thin margins, the value method could make a loss-making product look profitable.
As a starting point:
- Volume suits most sea freight, where space in the container is the constraint.
- Weight suits air freight and dense goods.
- Value suits shipments of similar-sized products, and is simple to apply.
Whichever basis you choose, use it consistently and record it, so cost of goods is comparable between shipments. Building this into a forward plan is part of our forecasting service, where landed cost feeds cash flow and margin projections.
If HMRC disagrees with your classification
HMRC can check declarations after goods are released. If it decides a different commodity code applies, it can issue a demand for the underpaid duty and the import VAT that follows from it, and penalties can apply in some cases.
If you disagree with a decision, you can ask for a review or appeal. For customs duty, GOV.UK says you have 30 days from the date of the review offer to accept it or appeal to the tax tribunal. Your best protection is a documented classification for each SKU, showing which headings you considered and why, and an Advance Tariff Ruling where the code is genuinely borderline.
If HMRC’s code means you have been overpaying, the same records support a claim for repayment.
Record keeping
Keep a complete import pack for every shipment:
- Purchase order, commercial invoice and packing list.
- Freight, insurance and clearance invoices.
- The customs declaration and entry reference.
- Proof of origin, such as the statement on origin.
- Your classification notes for each SKU.
- Your postponed import VAT statement or C79 for the month.
GOV.UK requires customs records to be kept for four years and VAT records for at least six, so keeping the whole pack for six years covers both.
Your pre-shipment checklist
- Incoterm agreed and importer of record confirmed as you.
- Commodity codes checked on the Trade Tariff for every SKU.
- Origin documents agreed with the supplier where a preference applies.
- Customs agent appointed, with written instructions on representation and PVA.
- Duty payment method chosen: per consignment, agent’s account or your own deferment account.
- Freight allocation basis decided and landed cost per unit budgeted.
- Record-keeping folder set up for the shipment.
To test your numbers before you commit, run the order through our UK import duty calculator. For landed cost tracked per SKU and import VAT reconciled every month, see our import accounting service or book a discovery call.
