Buying from outside the UK - VAT, customs duty and handling fees

An overseas website shows a jacket at £150 with free delivery when the British shop wants £220. It looks like an easy decision, right up to the moment a courier asks for £64 before they will hand over the parcel. Importing is not a bad idea, but it only works when you can price the whole journey rather than the item. Three separate charges can land on a parcel from outside the UK, and they are calculated in a particular order.

The three charges

Import VAT is the big one and applies to almost everything. It is charged at the normal UK rate, 20 per cent for most goods, and it is calculated on the value of the item plus the delivery cost, not just the item. That detail alone surprises people: a £100 item with £30 delivery is taxed on £130.

Customs duty is separate and depends on what the goods are and where they were made. Rates vary by product type, with clothing and footwear among the higher categories, and the duty is charged on the same value base. Duty is not due at all on consignments valued at £135 or less, which is why that figure matters so much.

The third charge is the one nobody budgets for. Whoever handles the customs paperwork, usually Royal Mail or a courier, charges you a fee for doing it. That is a flat administrative charge, commonly somewhere between £8 and £15 depending on the carrier, and it applies whether the tax bill is £4 or £400.

The £135 threshold

The value of the consignment decides how the tax is collected, and £135 is the line. At or below it, the overseas seller is supposed to charge UK VAT at the checkout and pass it on, so the price you see is the price you pay and the parcel arrives without a further demand. Above it, VAT and any duty are collected on entry instead, which is where the handling fee appears.

That threshold applies to the consignment, not to each item, so two £80 items sent together cross it while the same two items sent separately do not. It is also based on the value of the goods excluding delivery and insurance, whereas the tax itself is then calculated including them. The practical result is a cliff edge: a £130 order often arrives clean, and a £140 order can arrive with a bill for £35 or more.

Gifts sent between private individuals have their own allowance and are free of import VAT up to £39. Something you bought yourself is not a gift, and a seller marking a commercial parcel as one is committing an offence rather than doing you a favour.

What it actually costs

The table below works through some common cases. Figures assume 20 per cent VAT, a £12 handling fee where one applies, and no duty in the first three rows. Note where the tax is collected: in the first two rows it is inside the price you pay at the checkout, and in the rest it is a separate demand before the parcel is released. Note too that where duty is charged, VAT is calculated on the duty as well, which is why the fourth row’s VAT is higher than the third’s on the same goods value.

Item value	Delivery	VAT	Duty	Handling	Total paid
£60	£10	£14, at the checkout	None	None	£84
£120	£15	£27, at the checkout	None	None	£162
£200	£20	£44, on delivery	None (duty-free type)	£12	£276
£200	£20	£49, on delivery	£26 (12% clothing)	£12	£307
£450	£35	£97, on delivery	None	£12	£594

Run those totals against the British price before deciding, not the headline. The discount calculator is useful here in reverse: work out what percentage the landed total actually saves you, and a 35 per cent discount on the sticker price frequently comes out in single figures once the tax lands.

Where the £307 goes

• Item and delivery

  72% - £220

  £200 item plus £20 delivery

• Import VAT

  16% - £49

  20% of goods, delivery and duty

• Customs duty

  8% - £26

  12% clothing rate

• Handling fee

  4% - £12

  Charged by the carrier

Where the risks are

Returns are the most expensive part of importing and the part nobody plans for. Sending an item back across a border costs real money, refunds of import VAT are possible but involve a claim to HMRC rather than a click in the shop’s returns portal, and the handling fee is gone. Anything you might return, clothing above all, is a poor candidate for an overseas order.

Your consumer rights change too. A seller based outside the UK is not bound by the Consumer Rights Act, so the 30-day right to reject and the six-year limitation period described in our guide to online shopping rights may not be available to you. What survives is your payment protection: the card routes in our Section 75 and chargeback guide work regardless of where the seller sits, which makes the card you pay with the most important decision on an overseas order.

Two smaller catches are worth knowing. Electrical goods often arrive with the wrong plug and, more seriously, may not meet UK safety standards or carry a valid warranty here. And some products are restricted or prohibited outright, which means the parcel is seized rather than taxed.

When importing is still worth it

The maths works best on items that are expensive relative to their weight, unlikely to be returned, and genuinely unavailable or heavily marked up in Britain. Specialist hobby equipment, niche instruments and parts with no local distributor are the honest cases. So is anything a British retailer sells at a large territorial mark-up, provided you check the landed total first.

It works worst on ordinary goods with ordinary margins. If the item is sold widely in the UK, the combination of VAT, duty and handling usually erases the gap, and you have swapped a straightforward return for an international one. In that case the better move is to wait for a domestic sale: our UK sales calendar covers when each category is cheapest here.

Summary

Work out the landed cost before you order: item plus delivery, plus 20 per cent VAT on that total, plus duty if the goods attract it, plus a flat handling fee of around £12. Under £135 the seller should collect the tax at the checkout and the parcel arrives clean, above it you pay on delivery. Pay by credit card, avoid importing anything you might send back, and compare the total against the price on the UK stores we list rather than against the overseas sticker price.