Partner Article

VAT – the Christmas gift that keeps on giving (or taking)

Researchers have predicted that, during November and December, consumer online retail expenditure will total over £20 billion.

Much of that online spending will be by shoppers buying goods from non-EU countries, in the hope that they can grab a bargain.

But beware the hidden costs under the Christmas tree, as there’s likely to be a tax bill.

While consumers may fancy a New World wine direct from the vineyard, authentic Bourbon direct from Tennessee, or their favourite Havana direct from the Caribbean, they’re likely to face excise duty and import VAT. Customs Duty will also be payable if the value exceeds certain limits.

And it’s not only alcohol and tobacco that incur import charges. If goods valued at more than £15 are bought over the internet, or by mail order, from outside the EU, import VAT at 20% of the value of the goods is payable. If the value of the goods is over £135, customs duty may also be payable.

And don’t think these taxes apply only to online purchases; that nice merino wool jumper sent as a gift from your aunt in New Zealand will also be subject to import VAT if it’s valued at more than £35.

If you’re planning a Christmas shopping trip to Manhattan then - you guessed it - VAT and duty will also be payable if the value of the goods brought back into the UK is more than £390.

Just in case you consider buying non-EU goods online and having them delivered to someone else, be aware that this doesn’t count as a ‘gift’ for import tax purposes: your best intentions could well result in the recipient being liable to UK duty and tax.

Doing your online shopping from suppliers in the EU? Then it’s just like shopping in the UK. Although there’s no customs duty payable, UK excise duty is payable on alcohol and tobacco and, although there’s no import VAT payable, the supplier is likely to charge the applicable VAT rate of his Member State.

Ah Christmas, the gift of giving. And paying the tax man.

This was posted in Bdaily's Members' News section by Baker Tilly .