The cost associated with importing equipment into the UK from a non European Union country
The internet has removed a lot of commercial barriers. With businesses going on-line, individuals are able to see what equipment and components are available from vendors in North America, Japan and Europe. Often the prices are attractive and, via the internet, ordering is easy. However the additional costs associated with buying from a foreign country are not obvious. In the first half of 2001 I purchased some equipment from a surplus vendor in the USA at a price that was one tenth of anything I could find in the UK. The process gave me first hand experience of the costs associated with importing goods into the UK.
The first cost is shipping. The equipment I bought cost $400, the shipping was $200 including insurance. As a point of reference the equipment came in two fairly large boxes, if it has been one box it would have been too large to lift. It was shipped "US Mail" which was the cheapest and slowest method offered by the vendor and took about 6 weeks to arrive. The only other foreign currency charge on the order was the cost of currency conversion; I usually pay by credit card and find that that I get a reasonable exchange rate from my credit card company without any additional fixed costs.
The next cost is Import Duty which is applied to the total cost of your order. Note that this includes the cost of shipping and insurance so if your goods are heavy or bulky resulting in greater shipping costs you will pay more duty. If you choose to have your goods delivered quickly the increased shipping costs will mean you will pay more Duty.
Once Duty is added to the total, Value Added Tax is then added. At the time of writing this was 17.5% and is charged on the cost of the goods, the shipping, the duty on the goods and the duty on the shipping. The final cost is the Clearance Fee added by the carrier for getting the goods through Customs. This charge is made on each package, so in this case, where there were two packages, there were two Clearance Fees. You pay these costs when the goods get delivered to your door, so be ready with your cheque book.
The tally below shows all the costs.
Cost of goods $400.00 Shipping and insurance $200.00 Cost of order converted to local currency £419.61 Import duty £ 24.58 VAT at 17.5% £ 77.73 Handling charge @ £6.25 per package £ 12.50 Total £534.42 Total converted back into original currency $764.17
The figures above show that the eventual price I paid was 91% more that the cost of the goods, something to remember when doing price comparisons between local and remote vendors. Having said that I was happy with this particular order, the quality was excellent, the choice was far greater than what was available in the UK, and because the base price was so low I still ended up paying less than the locally sourced alternatives.
Check the Duty and VAT you are charged, referring if necessary to http://www.hmce.gov.uk/public/shopping/shopping.htm I did and was unable to get the figures to tally. With a bit of further work I was able to piece together how they had worked out the figures which I thought were incorrect. The documents attached to each package showed the total for the whole order, the Customs people then applied the total to each package effectively doubling the Duty and VAT. By writing a letter I was able to reclaim £70.
Since the Duty and VAT is payable on the shipping cost it's a good idea to get an estimate of the cost of shipping from the vendor before placing the order.