Import VAT Method 2 flat rates rise across air and surface freight

Importers using estimated incidental costs to value goods for import VAT face higher additions from the updated Method 2 nationally agreed rates.GOV Method 1 requires actual costs to be declared at importation, while Method 2 offers estimated rates as an alternative. The methods are non-hierarchical, so an importer may use whichever best suits its circumstances.

Method 1 takes actual costs at the time of importation, which is the time a customs debt becomes due or would have become due if the goods were subject to duty. Where costs later prove incorrect, for example because the place of consignment changed or additional storage costs were incurred, a post-clearance amendment is required.

Method 2 may be used instead of actual costs only for international movements of goods that terminate in the United KingdomGOV. The rates represent average costs of handling, storage, customs declarations and transport from the point of arrival in the United Kingdom to destination. Where an importer or agent uses the rates, Customs will not require post-entry amendments.

For Group A airfreight, the addition rises from 40 pence per chargeable kiloGOV with a £100 minimumGOV to 55 pence per chargeable kiloGOV with a £135 minimumGOV, whichever is greater. A 100-kilo chargeable consignment therefore adds £100 under the old minimum and £135 under the new one once the per-kilo calculation is below the floor, while heavier consignments take the per-kilo amount.

For Group B surface-freight groupage and consolidation consignments by trailer, rail wagon or container, the delivery and handling element rises from £90GOV to £125 per gross weight tonneGOV, the flat other-ancillaries element rises from £80GOV to £110 per consignmentGOV, and the floor rises from £170GOV to £235GOV. The combined amount is added to the value at importation.

For Group C surface-freight full-load consignments by trailer, rail wagon or container, the addition rises from £550GOV to £760 per full-load consignmentGOV.

Incidental expenses covered by the valuation include customs clearance charges, quay rent, entry fees, demurrage and storage and handling costs. Values for other consignments, including those destined for delivery in other member States, should be based on Method 1. In exceptional circumstances where Method 2 should not be used, importers should seek advice from the National Clearance Hub on 0300 322 7064.

Method 2 is the HMRC nationally agreed alternative to declaring actual incidental import costs for movements terminating in the United Kingdom.