What is Import VAT in the UK?
Import VAT is the Value Added Tax charged on goods imported into the UK from outside the UK — including from the EU since Brexit. It is charged by HMRC at the point of importation and is calculated on the customs value of the goods. The rate is the same as domestic UK VAT — 20% for standard-rated goods.
Since the UK left the EU's single market on 1 January 2021, VAT is now charged on all imports from EU countries in exactly the same way as imports from the rest of the world. There is no longer a VAT-free threshold for low-value imports from the EU.
How Import VAT is Calculated
Import VAT is not simply calculated on the purchase price of the goods. HMRC calculates it on the customs value, which includes the cost of the goods, international shipping, insurance, and any customs duty paid. This is sometimes called the CIF value (Cost, Insurance, Freight).
Customs Value
CIF = Goods + Shipping + Insurance
e.g. £1,000 goods + £100 shipping = £1,100
Import VAT (20%)
VAT = (CIF + Duty) × 0.20
e.g. (£1,100 + £55) × 0.20 = £231
📦 Worked Example — Importing Goods from Germany Post-Brexit
Postponed VAT Accounting — The Key Post-Brexit Change
The most important change for UK importers post-Brexit is Postponed VAT Accounting (PVA). This lets VAT-registered UK businesses account for import VAT on their VAT return rather than paying it at the border. This is a major cash flow benefit — you do not need to pay the VAT upfront and wait to reclaim it later.
To use PVA, simply declare it on your import customs declaration. HMRC will generate a monthly Postponed VAT Import Statement, which you use to complete your VAT return. PVA is available for all goods imported into the UK by VAT-registered businesses.
Customs Duty vs Import VAT — The Difference
These are two separate charges that both apply to many UK imports:
- Customs duty — a tax on the goods themselves, based on the commodity code and country of origin. Rates vary from 0% to over 20% depending on the product. Check rates on the UK Trade Tariff.
- Import VAT — calculated at 20% (standard rate) on top of the customs value including duty. Unlike duty, VAT-registered businesses can reclaim import VAT as input tax on their VAT return.
Low-Value Imports — The £135 Threshold
For goods valued at or below £135 (excluding shipping and insurance), a different rule applies. Since January 2021, the overseas seller is responsible for collecting and accounting for UK VAT at the point of sale — rather than VAT being collected at the border. This affects many purchases from overseas online retailers.
For goods above £135, the standard import VAT process applies and VAT is collected at the border by HMRC through the customs declaration process.
HMRC source: Import VAT rules and postponed VAT accounting are governed by HMRC. Verify current rules and rates at GOV.UK — Postponed VAT Accounting. Always consult your customs agent or accountant for complex import situations.
Can UK Businesses Reclaim Import VAT?
Yes — VAT-registered UK businesses can reclaim import VAT as input tax on their VAT return, in the same way as domestic VAT. If you use Postponed VAT Accounting, you account for the import VAT on your return and simultaneously reclaim it (assuming full taxable use), resulting in a net zero effect on your VAT liability. This is why PVA is so beneficial for cash flow.