Following the end of the Brexit transition period, new rules on tax and duty now apply on goods sent to the UK from overseas. These changes are meant to ensure that goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT free imports. 

For goods sold directly to customers in the UK from overseas with a value of £135 or less (which aligns with the threshold for customs duty liability) the point at which VAT is collected has moved from the point of importation to the point of sale. 

Online marketplaces that are involved in facilitating the sale, are responsible for collecting and accounting for the VAT. Business to business sales not exceeding £135 in value will also be subject to the new rules but VAT can be accounted for by way of the reverse charge.

In addition, the low value consignment relief (LVCR), which was an import VAT exemption for goods valued at £15 or less, has been removed in:

• Great Britain for goods imported from outside the UK
• Northern Ireland for goods ordered remotely that are imported from outside the UK and EU

Normal VAT and customs rules on consignments valued at more than £135 will apply on the importation of goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU.

There are different rules on the sale of goods into Northern Ireland from the EU and on the movement of goods between Northern Ireland and the EU.

Air Passenger Duty (APD) is a departure tax levied on most air travel. Each geographical band has two rates of Air Passenger Duty, one for standard class and the second for ‘other’ higher classes of travel (usually premium economy / business / first class). Currently, band A (short-haul) ranges from £13 for a standard class journey and £26 for an ‘other’ class of travel. The Band B (long-haul) rates for journeys over 2,000 miles range from £78 to £156.

The rates for 2019-20 were announced as part of last year’s Budget measures. The Band A rates and the long-haul economy rates will remain the same whilst the Band B premium class rates will increase to £172. In his autumn Budget speech, the Chancellor confirmed that he will once again freeze the short-haul rates as well as the long-haul economy rates in 2020-21. The rates paid for Band B long-haul journeys will range from £80 to £176. The rates for the tax year 2020-21 are announced early in order to give industry sufficient advance notice of changes in the rates.

Passengers using certain classes of private jets face even higher charges. The short-haul band remains frozen at £78 but the long-haul rates are currently £468, increasing to £515 in 2019-20 and to £528 in 2020-21. 

Children under 16 are exempt from APD when travelling in standard economy class. There are also exemptions from APD for flights from airports in the Scottish Highlands and Islands as well as an exemption for direct long-haul flights departing from Northern Ireland.

Here is a reminder for travellers of their duty and tax free allowances whilst travelling this summer.

Travelling to an EU country

Where tobacco or alcohol is brought in from another EU country, no duties or tax will be payable as long as you can demonstrate that the goods are for your own use and that you paid the relevant taxes and duties on the purchase.

However, HMRC provides the following guidelines as to an acceptable maximum for personal use. Travellers that exceed these limits are more likely to be subject to further questioning.

• 800 cigarettes
• 200 cigars
• 400 cigarillos
• 1kg of tobacco
• 110 litres of beer 
• 90 litres of wine
• 10 litres of spirits
• 20 litres of fortified wine (for example port or sherry)

Travelling to a non-EU country

Each adult travelling is allowed to bring the following back to the UK for their own use without any UK tax or duty liabilities.

• 200 cigarettes or 100 cigarillos or 50 cigars or 250g of tobacco
• 4 litres of still table wine
• 16 litres of beer
• 1 litre of spirits or strong liqueurs over 22 per cent volume; or 2 litres of fortified wine (such as port or sherry), sparkling wine or other alcoholic beverages of less than 22 per cent volume.
• £390 limit for of all other goods including perfume and souvenirs. Taxpayers arriving by private plane or boat for pleasure purposes can bring in goods up to the value of £270 tax free.

The Customs Handling of Import and Export Freight (CHIEF) is a computerised service that records the movement of goods by land, air and sea. The system allows importers, exporters and freight forwarders to complete customs information electronically, and automatically checks for entry errors.

However, the CHIEF system is over 25 years old and has struggled to cope with complex reporting requirements that could not easily or cost-effectively be accommodated within the existing service. HMRC has been working on a replacement system for a number of years.

The new system called the Customs Declaration Service (CDS), has been designed for businesses that import or export goods outside the EU, and a phased launch will begin in August 2018. The CHIEF and CDS systems will then run in parallel for a short time to aid the transition from one system to the other. It is expected that all declarations will be made on the CDS from early 2019.

The decision to introduce the CDS predates the Brexit decision by quite some time. However, preparations are being made to scale up the CDS to handle any potential increases in the volume of declarations that may result from the UK’s exit from the EU.

Importers and exporters should by now be aware of this new system and they or their agent should be starting to prepare for the changes. For example, CDS will be accessed on the GOV.UK portal and changes will be required to align UK customs data with international standards.