With just over three weeks till Christmas, if you're looking to snap up bargain gifts abroad make sure you factor in customs duty and VAT, as the item may not turn out to be so cheap after all.

When you shop within the EU customs charges aren't normally due on goods, although EU companies may charge their own equivalent VAT rate.

But it's bargain hunters travelling outside the EU or buying goods online from non-EU e-tailers who are being urged by HM Revenue and Customs (HMRC) to check how much they can buy before customs duty or VAT is charged (see our Christmas Bargains guide for tips on cutting festive costs).

HMRC says shoppers should also beware of websites that say they'll undervalue your goods so you won't pay VAT, or offer famous brand names at very low prices. It says it is aware of these sites and shoppers who think they've found a bargain may actually end up paying more or having their goods seized.

An easy rule of thumb is that the charges for delivery, customs and VAT can add around 30% to the price listed, so unless you're buying goods that are over 30% cheaper than you could buy here, it may be best to stick to shopping within the UK.

HMRC's head of customs policy, Angela Shephard, says: "We know many people like to go abroad at this time to buy their Christmas gifts, or buy online from non-EU countries, and think that the 'cheaper' price they see is always the price they finally pay.

"We want to remind everyone how much they can actually bring back from abroad or buy from an online overseas seller without having to pay customs duty or import VAT."

A spokesperson for HMRC adds: "Customs charges are normally required to be paid before goods can be released from customs control. Charges are calculated on the information declared to customs.

"Customs, select and examine imports based on the customs declaration and a wide range of risk parameters. Where goods are found to be falsely declared they may be seized, or the correct details will be established and the importer will be required to pay the VAT and other charges before the goods will be released."

Martin Lewis
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So what are the charges?

Here's what you need to know when buying items from abroad:

How is the 'worth' of a product calculated?

When HMRC calculates how much, if anything, you pay in customs duty and VAT, it uses the price you paid for the item excluding any postage/shipping.

However when a charge is due, it is normally applied to the value of the goods including postage/shipping.

I'm buying from a non-EU company that has a UK domain name or a UK store, do I need to pay?

Customs charges are due on the movement of the goods, rather than where the seller is based – for example, a seller with a UK domain name/web address may send items direct to customers from Hong Kong, and customs charges may therefore be due on these goods.

I'm buying goods worth under £15 from outside the EU via the internet or by mail order. Is there a charge?

There's no charge for this unless the goods are alcohol or tobacco products, in which case the relevant excise duty is applied. See below for more information on this.

I'm buying goods worth over £15 but under £135 from outside the EU via the internet or by mail order. Is there a charge?

You'll be charged VAT if applicable by HMRC at 20%, which is calculated based on the total package cost, regardless of how many items are in it, and it's charged on the full price of the package, not just the value that exceeds the £15 limit.

If someone's sent me a gift worth less than £36 to my UK address from outside the EU, will I have to pay any charges?

There's no charge unless the goods are alcohol or tobacco products, in which case the relevant excise duty is applied (see below).

To qualify as a gift, the item must be sent from one private individual to another, with no money changing hands.

If someone's sent me a gift worth more than £36 to my UK address from outside the EU, will I have to pay any charges?

If the value exceeds £36, VAT at 20% will be charged on the full price of the item, not just the value above the £36 allowance. VAT will be collected from the recipient, not the sender, by the courier service delivering the item, which will then pass it on to HMRC.

I've received gifts over the value of £135 from a non-EU country. Is there a charge?

You may have to pay customs duty and VAT at 20%, depending on what goods have been bought or sent. If the amount of customs duty due is less than £9, it'll be waived.

There are around 14,000 custom duty classifications for products, with average percentages between 5% and 9% on the kind of item being bought or imported. However customs duty can sometimes be as low as 0% or as high as 85%, depending on the goods in question. A gift with a value up to £630 though will only be charged a maximum rate of duty of 2.5%.

As explained above, goods or gifts costing less than £135 won't have customs duty applied, but they will have VAT applied if they're worth over £15 for goods, or over £36 for a gift.

I'm buying alcohol and tobacco products online or by mail order from inside and outside the EU. What's the limit and is there a charge?

Excise duty is always due on alcohol and tobacco products purchased online or by mail order. See HRMC for a full list of alcohol and tobacco excise duty rates and allowances.

I'm bringing goods into the UK in person from the EU. Is there a charge?

There are no charges and no limits on the amount of duty and tax paid goods, including alcohol and tobacco, you can bring back from the EU providing they are for personal use.

HMRC says questions may however be asked if you exceed certain alcohol and tobacco amounts, for example, if you are re-entering the UK with more than 90 litres of wine or 800 cigarettes.

I'm bringing goods into the UK in person from outside the EU. Is there a charge?

When travelling to the UK from outside the EU, if you bring in any single item worth more than the £390 goods allowance (£270 if arriving by other means, including private plane or boat for pleasure purposes), you must pay duty and/or tax on the full item value, not just the value above the allowance.

If you're arriving by other means, including by private plane or boat for pleasure purposes, you can bring in goods up to the value of £270 without paying customs duty or VAT.

Above these allowances and up to £630, you may have to pay a customs duty flat rate of 2.5% depending on the item and its origin. For goods over £630, the duty charged depends on the type of goods and their origin.

For all goods above £270 or £390 (whichever is appropriate depending on the means of transport) you may also have to pay VAT at 20% depending on the item.

For more information on import charges and travellers' allowances, visit the HMRC website.

Is VAT always 20%?

The VAT rate for imports usually follows the same rate as similar goods sold in the UK. So as our VAT rate is set at 20%, you could have to pay this plus customs and excise duty depending on the type of goods and the country you're travelling from.

However there is a lower VAT rate of 5% on certain collectors' items, such as stamps, and certain works of art and antiques over 100 years old.

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