02 February 2021
Now the Brexit transition period has ended, goods moving between Great Britain and the EU and vice versa must be declared to customs and are potentially liable to duty and import VAT in the country of arrival. While the effects of this major change on international businesses have been well publicised, there are also implications for private citizens, who have until now been accustomed to freely transporting their possessions across the UK/EU border without having to think about customs matters.
While some reliefs from customs charges and procedures are available, these need to be considered in advance and it is often necessary to apply to HMRC to make use of a particular relief before the goods are moved.
Transfer of residence relief is available where a private individual transfers their country of residence from the EU to the UK, bringing their household effects and personal property with them. To qualify, that person must have been resident outside the UK for 12 months or more and (unless they are claiming this relief as a student or on marriage) must have owned and used those goods for at least six months before they are imported. HMRC requires form ToR1 to be completed online before the goods are shipped, and the goods will be subject to some restrictions on use for 12 months after they arrive. There is no relief for goods imported from secondary and holiday homes in the EU. More information can be found in HMRC guidance: Transfer of residence to Great Britain.
Items that do not qualify for transfer of residence relief are potentially liable to duty and VAT on arrival in the UK, calculated on their original purchase price. Duty rates and VAT rates vary according to the type of goods involved – typical examples are as follows:
- Cars (excluding classic cars) are subject to duty at 10 per cent and VAT at the standard rate of 20 per cent. For new cars, this is calculated on the purchase price, while second-hand cars are taxed based on their value in Glass’s guide.
- Antiques (100 years old or more) and original works of art can be imported free of duty but are subject to VAT at 5 per cent.
- Collectors’ items, including classic cars, may also be eligible to be imported free of duty and at the 5per cent rate of VAT, but this requires a specific HMRC ruling that the good qualify.
On new goods, there is a risk of incurring a double VAT liability, ie the VAT payable in the EU country of purchase followed by UK import VAT payable when the goods arrive in Great Britain. It may be possible to obtain VAT zero-rating or a refund of VAT from the country of purchase, either by having the goods shipped directly to the UK by the vendor or buying them under the retail export scheme if the EU vendor operates it. There is also a personal export scheme available to obtain VAT relief on cars bought in the EU for permanent removal to the UK. However, although a double VAT burden may be relieved, customs duty may still be payable on the goods in the UK.
High value goods that will be moved to Great Britain for up to two years before being re-exported may be eligible for temporary import relief from duty and VAT, but authorisation must be applied for in advance. UK goods (such as yachts) returning to Great Britain after spending up to three years in the EU may be eligible for returned goods relief.
The information above concentrates on goods arriving in the Great Britain from the EU. Similar rules apply to personal property moving in the opposite direction from Great Britain into the EU but it is important to check local import duty and VAT rules and eligibility for transfer of residence relief in the country of arrival. While exports of goods direct from the vendor to the EU may qualify for zero-rating, the retail export scheme has been discontinued in Great Britain so it is not possible to reclaim VAT paid on goods bought on the high street. Some antiques, works of art or cultural goods may require an export licence before removing them from the UK.
Once any advance authorisations have been obtained, it is also important to ensure that the relevant authorisation numbers have been included on the customs declaration when the goods arrive in Great Britain.
The days of frictionless movement of personal property between the UK and EU are over, so always make sure you include the necessary customs formalities in your plans to move your home or personal possessions across the border.