UK announces post-Brexit customs tariff
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

UK announces post-Brexit customs tariff

Sponsored by

Sponsored_Firms_deloitte.png
Businesses will have a few months to analyse the impact of the UKGT on their business

Christian Deglas and Michel Lambion of Deloitte Luxembourg explore the details of what the UK’s independent tariff policy will encompass.

One of Brexit’s many impacts is the changes to the tax rules that will happen at the end of the transition period. This includes the movement of goods between the United Kingdom (UK) and the European Union (EU) becoming imports and exports for customs and VAT purposes. In this respect, the government of the UK recently published its standard customs import tariff that will replace the standard customs import tariff of the EU after the end of the transition period.



To replace the EU’s customs import tariff, the UK will apply its own customs tariff, the UK Global Tariff (UKGT), to goods imported into the UK, either from an EU member state or any other jurisdiction. The UKGT will apply from January 1 2021, i.e. after the end of the transition period. In the absence of any preferential trading arrangement, such as a free trade agreement (FTA), the duty rates set out in the UKGT will apply to UK imports (subject to any reliefs or tariff suspensions in place). 



In other words, the UKGT will, in principle, apply to EU imports into the UK after the end of the transition period, unless the EU and the UK conclude otherwise in a trade agreement. Such an agreement should, in principle, lower or reduce to zero the duties on all or some goods; and the political declaration sets out the ambition of both parties to achieve duty-free and quota-free access to each other’s markets. 



It is important to note that transactions involving the movement of goods between Northern Ireland and EU member states will continue to be considered as intra-EU movements after the end of the transition period. Goods imported into Northern Ireland from EU member states will, therefore, not be subject to UK customs duties. This special regime applies as long as it has democratic consent in Northern Ireland, with the first consent period being four years after the end of the transition period. 



The UKGT eliminates or reduces many customs tariffs compared to the existing EU customs tariffs. However, the mere fact that a customs tariff may be imposed on EU products that were previously traded freely in the UK (and vice versa) may have a significant impact on EU businesses. Even if the UK and the EU agree to an FTA that eliminates tariffs, businesses will still need to meet the FTA’s rules of origin to qualify for the preferential duty rates.



It is not possible in this short article to provide much detail regarding the 11,830 positions in the UKGT. The full list of the UKGT is published and searchable on the UK government’s website. Even if one of the tariff’s aims is to reduce the duties, they may remain quite significant for some products. For example, steel products would generally not be taxed, but some would be subject to customs duties with rates of 2% or 4%, and a few up to 8%. Similarly, glass products would generally not be subject to customs duties, except a few subject to duties up to 10%.



The application of the UKGT will, of course, affect businesses selling goods to the UK. The imposition of duties could have a direct impact on the price of products, compared to the exisiting situation where no duties are due. In particular, EU undertakings may lose a competitive advantage compared to competitors established in non-EU jurisdictions, whose products are already subject to customs duties and who will benefit in some cases from the reduction of rates foreseen by the UKGT, compared to the EU ones that are applied to their products. Non-EU companies should also examine how the UKGT may affect them too, even favourably, should the tariff reduce or abolish the duties that apply under the EU tariff.



At the end of the transition period, customs formalities will have to be fulfilled when goods are leaving the EU and when they enter the UK, even if the UK and the EU agree to an FTA. Concerned taxable persons should ensure their capability to handle these custom formalities, possibly by designating a custom agent. From a practical viewpoint, the accomplishment of these formalities may also affect the delivery time of products. 



Businesses will have a few months to analyse the impact of the UKGT on their business and take appropriate measures. 



Christian Deglas

T: +352 45145 2611

E: cdeglas@deloitte.lu



Michel Lambion

T: +352 451 453 993

E: milambion@deloitte.lu



more across site & bottom lb ros

More from across our site

An overhaul of EU import taxes could spell the end of an exemption for cheap parcels
Sharma, managing director for A&M in the United Arab Emirates, tells ITR about intense time pressures, mimicking Jurgen Klopp and what makes tax cool
AI will speed up some of the most laborious TP processes without making human input redundant, argues Hank Moonen, CEO of TaxModel
Firms with a broad geographic reach are more likely to win work, especially from global companies with high turnovers, according to survey data of nearly 29,000 corporate counsel
Australian businessman Gordon Merchant used EY’s advice to offset an A$85 million capital gain, according to the Federal Court
Griggs has been drafted in ahead of schedule as the incumbent Tim Ryan departs for Citigroup; while the Netherlands plans to scrap a 15% share buyback tax
Authorities must ensure that Russian firms do not use transfer pricing schemes to increase profits made from oil sold in different markets, advocacy organisations have argued
Fallet, a partner at law firm Mauger Muniz Advogados in Brazil, tells ITR about his passion for tax law, the leaders who inspired him, and what makes tax cool
The former chief operating officer will assume the role on July 1
Ahead of next week's Indirect Tax Forum in London, ITR spoke with Christian Van Der Valk of Sovos about how different governments and companies are embracing e-invoicing
Gift this article