A tariff is a tax on imported goods. In the UK it is called import duty (or Customs Duty) and is charged under the Taxation (Cross-border Trade) Act 2018. The standard rates are set by the UK Global Tariff, which replaced the EU's Common External Tariff on 1 January 2021. What an importer actually pays depends on three things: the commodity code of the goods, where they originate, and their customs value. Import VAT, usually at 20%, is charged on top of the duty.
How a UK tariff rate is set
Section 1 of the 2018 Act charges import duty "by reference to the importation of chargeable goods into the United Kingdom". Section 8 requires the Treasury to maintain a customs tariff: a system that classifies goods, assigns them codes, and sets the rate of duty for each code. The tariff can set the duty by reference to the value of the goods, their weight or volume, or both. In practice most rates are a percentage of value (ad valorem). Some agricultural and food products carry a specific rate per kilogram or per litre, or a mix of the two.
The default rate in the UK Global Tariff is the "most favoured nation" rate. It applies to goods from any country unless a trade agreement, a preference scheme or a suspension gives a lower rate.
The commodity code decides the rate
Every product has a commodity code, and you can look it up in the online Trade Tariff. The code decides the rate of duty and import VAT, whether a preferential rate is available, and whether a licence, quota, anti-dumping duty or safeguard measure applies. On a customs declaration:
- The first 8 digits. These are the combined nomenclature code. HMRC notes that most duty rates are set at this level;
- Digits 9 and 10. These add detail for imports and can still change the duty due or the measures that apply;
- The first 6 digits. These are the only part shared internationally, so a code supplied by an overseas seller needs checking against the UK tariff.
Where classification is uncertain, you can apply to HMRC for an Advance Tariff Ruling. You must apply before customs procedures for the goods are completed, because rulings are not made retrospectively. HMRC says it will reply in 30 to 120 days.
What the duty is calculated on
Ad valorem duty is a percentage of the customs value. Under the main valuation method (transaction value), the customs value is usually the price paid plus the costs of transport, insurance, loading and handling needed to deliver the goods to the UK border. Delivery charges beyond the border can be deducted if they are shown separately.
Import VAT is then charged on a larger figure: the customs value plus the duty, plus incidental costs such as transport and insurance up to the goods' first destination in the UK.
Worked example. A company imports goods invoiced at £10,000. Freight and insurance to the UK port cost £800, and haulage from the port to its warehouse costs £200. Assume the commodity code carries a 4% duty rate and no preference applies:
| Step | Calculation | Amount |
|---|---|---|
| Customs value | £10,000 + £800 | £10,800 |
| Import duty | 4% × £10,800 | £432 |
| Value for import VAT | £10,800 + £432 + £200 | £11,432 |
| Import VAT | 20% × £11,432 | £2,286.40 |
A VAT-registered importer can normally recover the import VAT, and postponed VAT accounting avoids paying it at the border. The £432 of duty is a real cost. It is not recoverable as VAT.
Ways to pay a lower tariff
- Trade agreements. Where the UK has an agreement with the country of origin, a preferential rate may apply. Goods must meet that agreement's rules of origin, and you must hold the right proof of origin. HMRC requires the declaration, the proof of origin and the supporting documents to be kept for at least 4 years;
- The UK–EU Trade and Cooperation Agreement. It gives zero tariffs only on goods that meet the UK–EU preferential rules of origin. Goods that are simply shipped from the EU but made elsewhere may pay the full UK Global Tariff rate;
- The Developing Countries Trading Scheme. It allows goods from eligible countries to be imported at a reduced or zero rate;
- Duty suspensions and tariff quotas. Suspensions remove or reduce duty on specific goods, usually production inputs, for a set period and in unlimited quantities. Autonomous tariff quotas do the same for a limited quantity. The latest round of suspensions was expected to take effect on 5 August 2026 and run until 31 December 2028. Suspensions do not cover VAT or trade remedy duties such as anti-dumping duty.
The commercial point is that origin, not the shipping route, drives the rate. A product assembled in the UK from Asian components may not qualify as UK-originating under a trade agreement. A finished good bought from an EU distributor may not be EU-originating.
Low-value goods and the £135 relief
Customs Duty is not currently charged on non-excise goods worth £135 or less sent to Great Britain. Excise goods pay duty at any value. The government has published draft legislation to remove the £135 relief and introduce new customs arrangements for low-value imports. It will come into force on a date the Treasury appoints by regulations, by October 2028 at the latest. Businesses that sell low-value goods direct to UK consumers from overseas should plan for duty, data and payment requirements before then.
Tariffs on UK exports
When you export, the tariff is set by the importing country and collected under its own rules. For exports to the EU, goods that do not meet the Trade and Cooperation Agreement rules of origin face the EU's Common External Tariff. In practice, your contract terms decide who carries that cost. Your origin paperwork often decides whether your customer pays any duty at all. For a UK exporter that can be the difference between winning and losing the sale.
Sources: section 1 and section 8 of the Taxation (Cross-border Trade) Act 2018, Government announces UK Global Tariff, commodity codes in the Customs Declaration Service, Method 1 transaction value, VAT value of imported goods, trade agreement preferences, duty suspensions and tariff quotas, goods sent from abroad and reforming customs rules for low value imports. See also our guides to importing goods into the UK and applying for an EORI number.
Acumon advises importers and exporters on duty and import VAT as part of our international VAT work. We can also review how tariff costs flow into product margins through management accounts.