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Customs & Duties

The United States is the UK's second largest import partner by value. British businesses import everything from American bourbon and clothing to industrial machinery and tech components. If you're importing from the US, here's exactly what you'll pay — and what you need to know about the current tariff landscape.

No Free Trade Agreement — Standard UKGT Rates Apply

The UK does not have a free trade agreement with the United States. Despite being discussed throughout the post-Brexit period and repeatedly raised by successive UK governments, no comprehensive UK-US FTA has been concluded. This means goods imported from America are subject to standard UK Global Tariff (UKGT) rates, with no preferential reductions.

A UK-US trade deal remains a political aspiration, but as of 2025 there's no agreed timeline. Don't plan your supply chain around a deal that doesn't yet exist. See how UK trade agreements work for context on which countries do benefit from reduced rates.

Common US Imports and Their Duty Rates

• Clothing and apparel: 12% — the same rate applies regardless of origin when there's no FTA
• Consumer electronics (phones, laptops, tablets): 0–4% — most technology is zero or near-zero rated under UKGT
• Spirits (bourbon, whisky): 0% duty under UKGT, but excise duty applies separately on arrival — currently £28.74 per litre of pure alcohol
• Machinery and industrial equipment: typically 0%
• Automotive parts: 4–6.5% depending on classification
• Cosmetics and beauty products: 0–6.5%

Import VAT at 20% applies on top of duty, regardless of the product category. Understanding the difference between customs duty and VAT is essential before you calculate your landed cost.

The £135 Customs Duty Threshold

Goods with a consignment value of £135 or less are exempt from customs duty. Import VAT still applies — for business-to-consumer purchases, the US seller (or the platform) collects and remits UK VAT at the point of sale for orders under this threshold.

Above £135, customs duty applies from the first pound, and UK import VAT is assessed at the border on the full customs value. The customs value is calculated on the CIF (Cost, Insurance, Freight) basis — goods value plus shipping plus insurance to the UK port of entry.

A Worked Example

A UK clothing boutique imports £500 of American casual wear from a Los Angeles supplier, with £40 shipping and £10 insurance.

That's a 51% uplift on the invoice price by the time the goods are in the UK warehouse. If your retail margin is based on the supplier's invoice, not the landed cost, the business model doesn't work.

Handling Fees: The Variable You Can't Always Control

Every major courier and freight forwarder charges a handling or disbursement fee for paying duty and VAT on your behalf and processing the customs declaration. For small parcels via services like FedEx, UPS, or DHL, this fee typically ranges from £10 to £25 per shipment. For larger freight consignments, customs agent fees can run to £50–£150 or more depending on complexity.

These fees are separate from shipping costs and appear on a separate invoice after delivery. Factor them into your landed cost calculation — particularly if you're receiving multiple small shipments per month.

Getting Your Commodity Code Right Before You Order

The single most costly mistake UK businesses make when importing from the US is using the wrong commodity code — either because they relied on a vague description or copied a code from a previous, different product. Finding the correct commodity code before placing the purchase order takes 10 minutes and can prevent a duty bill that's hundreds of pounds higher than it needed to be.

For VAT-registered UK businesses, import VAT can be reclaimed through the VAT return using postponed VAT accounting — but customs duty cannot be reclaimed. It's a cost of goods. Get the rate right upfront.