UK announces post Brexit customs tariff

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UK announces post-Brexit customs tariff

4 June 2020

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The UK government recently published the standard customs import tariff that will replace the European Union’s (EU) tariff after the transition period ends, which is scheduled to be 1 January 2021 but could potentially be extended by one or two years. EU businesses selling goods to the UK should consider how these changes may affect their sales price. They should also prepare for how to deal with EU and UK customs formalities and how they may affect the delivery times of their products to the UK. Persons importing goods from the UK should also prepare for the possible application of EU customs duties.

Currently, the Brexit transition period agreed by the EU and the UK is scheduled to end on 31 December 2020. Therefore, the UK’s own customs tariff is scheduled to apply from 1 January 2021 onwards, unless the transition period is extended by one or two years. However, the UK government has announced that it does not intend to ask for an extension.

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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, unless an exception applies, such as a relief or tariff suspension.

It also means that the UKGT will, in principle, apply to EU imports into the UK after the transition period ends, unless the EU and the UK decide otherwise in a trade agreement. Such an agreement should, in principle, lower or abolish the duties on all or some goods.

We remind you that transactions involving the movement of goods between Northern Ireland and EU Member States will continue to be considered as intra-EU-transactions after the end of the transition period. Therefore, goods sold to Northern Ireland by EU businesses would not be subject to UK customs duties. This special regime is expected to apply for four years from the end of the transition period (in principle, 31 December 2020) and could be renewed (under somewhat complex rules) for a further four or eight years.

Tariffs

The UKGT eliminates or reduces a lot of customs tariffs compared to the current EU customs tariffs. However, in some cases, the mere fact that a customs tariff will be imposed on EU products that were previously traded freely with the UK may have a significant impact on concerned EU businesses.

It is impossible to list all 11,830 tariff positions in detail here, so we will only mention a few examples. The rate applicable to horses (exclusive of slaughter and pure-bred for breeding) would be 10%. The rate applicable to wines of less than 13% of alcohol per volume would be GB£10,00/hl. The majority of steel products would not be subject to UK customs duties, while the ones that are subject to duties would have relatively low rates (usually 2% or 4%, with a few up to 8%). Similarly, most glass products would not be subject, except a few to duties up to 10%.

The full UKGT list is published and searchable on the website of the UK government. (https://www.check-future-uk-trade-tariffs.service.gov.uk/tariff). 

Impact

EU businesses selling goods to the UK must enquire about these new duties because they will have a direct impact on the price of their products, compared to the current situation where no duties are due. In particular, these undertakings would lose their advantage on competitors established in other non-EU jurisdictions, as their products are already subject to customs duties and could benefit from the decrease in rates foreseen by the UK tariff, compared to the EU ones that currently apply to their products.

Concerned businesses should make sure they are capable of handling the customs formalities of goods leaving the EU and entering the UK (for example, by designating a customs agent) and how these formalities will affect their delivery times.

Equally, the import of goods from the UK (except those from Northern Ireland) would be, as from the end of the transition period, subject to EU customs duties. Therefore, concerned persons should check whether imported goods would be subject to EU customs duties (for example on the Luxembourg Customs Authorities website: https://saturn.etat.lu/arctictariff-public-web/#!/home) and take the EU and UK formalities into consideration and their impact on the delivery of their purchases.

And, as usual, all this is subject to the final negotiations. We will continue to monitor the situation closely and keep you informed.

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