This information relates to England, Wales and Scotland. Different rules apply for Northern Ireland, you can find out more via the NI Business Info website.
Short on time? Watch our five minute interview with Anton on the three things businesses need to know ahead of 1 January 2021.
Fresh challenges brought about by the current Coronavirus pandemic mean you might not have had time to plan your import and export strategy from 2021 onwards.
But now the UK has left the European Union and with the transition period coming to an end on December 31, it’s essential to get to grips with what changes lie ahead.
The UK is leaving the EU single market and customs union which means from January 1, 2021, the process for importing and exporting goods will change.
Anton Gunter, Managing Director of freight forwarding company Global Freight Services, is one of the FSB’s go to experts on international trade. We asked him to answer common questions asked by small businesses regarding imports and exports after 31 December 2020.
I import from the EU, what do I need to do to be ready for on 1 January 2021?
If your business relies on goods being imported from European countries and you want to continue to do this, then you will need to make customs declarations. You can either do this yourself or hire someone such as a freight forwarder.
From January 1, the rules around importing certain types of goods will also change so it’s important to check the licences and certificates you might need as well as the labelling and marketing standards for goods.
You will need an Economic Operators Registration and Identification (EORI) number which starts with GB to be able to import anything from January so make sure you have applied for yours in preparation for the change. (link to next section)
Finally, customs duties and VAT will apply to all imports so make sure you’re aware of the additional costs so that you can factor these into any import budgeting.
I export goods to the EU, what changes for me?
The process of exporting products to the EU will also change from January 1 and in line with above, you will have to make customs declarations when sending items to countries located within the European Union. At the moment these rules apply only to exporting goods to the rest of the world.
It also needs to be remembered that a customs entry will need to be made when the goods enter the destination country. Your customer will need to have an EORI number and a customs representative in order to complete the import process into the European country of choice.
Again, there will be different rules around the licensing and labelling of goods which are being exported to the EU so make sure you do your homework on items which apply to your business.
An EORI is also crucial for exporting and you must make sure you have a new number which starts with GB to ensure your export strategy can smoothly transition into 2021.
Lastly, there will be some changes to the VAT charged on goods exported to the EU. Most goods will be eligible for ‘zero rate’ VAT but make sure you check in advance what applies to your business.
What is an EORI number and how do I get one?
You need an Economic Operator Registration Number, or EORI for short, to trade goods with countries outside of the EU - otherwise known as the rest of the world.
From January 1, 2021, you will also need an EORI number to enable you to move goods between Great Britain and EU countries.
This is one of the most important steps to take to ensure your business is ready to continue trading with Europe when the UK leaves the EU single market at the start of 2021.
Without it, you won’t be able to make the relevant customs declarations to HMRC and you could end up having to pay increased costs and face delays on goods which you are trying to import or export.
If you are VAT registered, you should already have an EORI number. As part of the preparation process, the government has started to auto-enrol businesses to allow them to automatically have an EORI number. If you are unsure if you have an EORI number you can make an online enquiry.
For non-VAT registered companies, you can apply for your EORI number here.
It’s a very simple process to apply for an EORI number and it should only take a few days for your application to be processed.
Will I need a licence or certificate to export goods from the UK to Europe?
From January 1, 2021, the rules around exporting goods to Europe from the UK will change and it’s possible you may need a licence for the type of items you want to move.
A licence or certificate will be needed if you want to export goods such as live animals, plants, food or agricultural products.
Chemicals and waste also require an export licence as do controlled goods such as military items, dual-purpose items (those which have a civil and military use) and firearms.
Planning ahead and checking in advance whether you need to obtain a licence or certificate will be helpful as you may need to allocate more time and resources to paperwork.
It could also prevent you from incurring costly inspection fees.
To check if your goods require certification take a look at the government website here.
Do I need a licence to import goods into the UK from Europe?
From January 2021, the rules around importing goods into the UK from Europe are going to change and it’s possible you may need a licence for the type of items you want to move.
For general cargo, ask yourself the following question:
Is the product I’m wanting to import of dual use, i.e. for civilian and military use?
If the answer to this question is yes, you are most likely going to need an import licence.
Try and plan ahead if you can and be prepared as gaining the relevant licence or certification may involve additional paperwork, time and effort.
It might also cost you more if you don’t have the relevant licence and you may be subject to inspection fees.
Animals, plants, food and agricultural products all require a licence as do drugs, chemicals and waste.
To check if your goods require certification take a look at the government website here.
What customs duties will I need to pay on imports and will I have to pay VAT?
From January 1, 2021 the process for importing goods from the EU is set to change.
You will need to pay customs duties and VAT on all imports and the amount you pay might be different to what you pay now.
It’s a good idea to be prepared and check in advance what payments you might incur so that you can build any additional costs into your budget.
The rate of duty is determined by HS Codes and is payable on both the value of the consignment and the cost of the freight.
Likewise, VAT at the standard 20% is payable on most commodities and like duty, is payable on the value of the consignment, the cost of freight and the value of duty paid.
The government website has a handy little tool which you can use to check what tariffs apply and it can be accessed here.
I want to continue exporting to the EU in 2021 but what do I do about customs declarations?
At the end of the UK transition period in December, all UK-based companies that want to continue exporting goods to EU countries will need to submit customs declarations.
Many businesses will choose to hire a person or business such as a freight forwarder or a customs agent to deal with customs declarations on their behalf but you can do it yourself.
The most important thing is to make sure you have applied for an EORI number. You can do this via the government website here. If you already have an EORI number, just make sure it starts with the letters GB.
You will also need to know the commodity codes for the items you want to export. These codes enable you to fill in the declarations and any other paperwork. A handy tool is available on the government website here.
Knowing the commodity codes for the goods you want to export will also enable you to check what duties or VAT to pay on your goods and whether you are eligible to apply for any reliefs on duty.
There will be some changes to the VAT and duties charged on goods exported to the EU from January 1, 2021, so make sure you are prepared and factor these costs into your export planning.
Finally, depending on the types of goods you want to export, you may need a licence or special certification so it’s best to check before you fill in your customs declarations. Certain items such as dual-use-goods, plants and military items all require you to have a licence.
If it’s proving difficult to gather all the relevant information to fill in your documentation, then make contact with a customs agent or freight forwarder who will be able to assist with the complex entries and submit the paperwork accurately.
What are commodity codes and why do I need to know about them?
At the end of the UK transition period in December, all UK-based companies that want to continue importing or exporting goods to and from the UK with EU countries will need to submit customs declarations.
As part of this process, you will need to know the commodity codes for the items you want to either import or export.
Classifying your goods correctly will enable you to calculate the rate of duty and import VAT you will need to pay on your items, and they will be helpful if you want to apply for any reliefs on duty.
It is simple enough to find the relevant commodity codes for your goods using the government’s Trade Tariff tool which can be found here.
Classifying your goods correctly is important and many people will choose to hire a person or business such as a freight forwarder or a customs agent to deal with customs declarations on their behalf, but you can do it yourself.
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