Beware extra charges on online orders (as they may be arriving from the EU)

Beware extra charges on online orders (as they may be arriving from the EU)

Our 10 need-to-knows

Beware – the rules on online orders have changed post-Brexit and shoppers may now be charged to receive goods from the EU. We've been bombarded with questions from MoneySavers who've been hit with extra costs – so here we explain what and when you'll need to pay, plus your rights if you're overcharged or want to return an item.
 

Warning – this is the first incarnation of this guide... This is a new guide covering a developing – and complicated – area, so please give us a bit of wiggle room.

We've done our best to get it right below, but we've sometimes had conflicting info from different sources, so can't 100% vouch for all of it. Let us know if you've feedback or questions we've not answered below by emailing news@moneysavingexpert.com.

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'I paid £94 in charges on a £265 order' – delivery rules have changed post-Brexit

What you'll now pay to receive goods from the EU depends on the cost of what you've ordered and the firm you're buying from. In some cases you may find when a courier delivers your parcel it asks you to pay import VAT, customs duty and a handling fee too before handing it over. For more on what Brexit means for consumers, see our 23 Brexit Need-to-Knows.

We've seen lots of stories from angry shoppers who've been hit with extra charges since the start of the year – one MoneySaver told us they'd had to pay almost £100 extra. Many were surprised to be asked to pay extra and didn't get a full explanation of what the charges were – in some cases they weren't even aware they were ordering from overseas.

Some say they were charged more than they should have been – and others say it's simply impossible to work out if they've been charged the correct amount due to the complexity of how charges are calculated. Here are a few of the stories we've seen:

"I received an alert from a courier firm to say I needed to pay £93.83 to receive a package I had ordered from France. This included VAT, duty and other fees. They haven't provided an option to return to sender... I placed the order for £265 and wasn't aware (stupidly) that I would be incurring a charge." Rachel, via email

"I recently purchased a coat from what I thought was a UK website, though it turns out the firm is in Italy from a search... Before delivery from the courier, I was advised that I need to pay tax and duty before the delivery will be made. The coat is now a third more expensive than I anticipated and was at the very top of my budget initially." Doug, via email

Warning – we've seen examples of scammers seeking to capitalise on the confusion in this area... watch out for emails, texts and calls asking you to pay for things like delivery costs, such as customs duty or import duty, when it isn't due.

If you get one of these emails and aren't sure if it's you're unsure if the contact is genuine, then ring the courier directly on a number you can find independently to check for them.

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  1. You may now have to pay extra fees to the courier who delivers your parcel – whether you'll be charged depends on the 'consignment value' of your order

    In a nutshell, if you order an item online and it's sent from the European Union, you may now face extra fees. These may include taxes charged by the Government and admin fees from the courier – we've full details below. Either way, you'll likely have to pay them to either the courier delivering your parcel or the collection point if you're collecting – and until you pay up, you won't get your hands on what you've ordered.

    These changes have come into effect because the Government introduced new rules for goods arriving into Great Britain from outside of the UK on 1 January 2021 after the end of the Brexit transition period.

    But whether you'll face these additional fees will depend on the total value of what you order – which is known as the 'consignment value of the goods'. This is the price the goods were sold for, not including:

    • Any transport or insurance costs, unless they are included in the price and not shown separately on the invoice.
    • Any taxes and charges.

    See our Cheap Parcel Delivery guide for more information on the best couriers.

  2. Consignment value of order costs £135 or less? You shouldn't face ANY extra fees

    If you order online from the EU and the consignment value – the total order (minus delivery charges and taxes) – costs £135 or less, you shouldn't have to pay anything extra. VAT will be included in the price you're shown when you pay online – as it was prior to Brexit – and there's no customs duty to pay. As a result, you shouldn't face courier handling fees either.

    This is because £135 is the threshold above which customs duty kicks in (except on certain items, such as alcohol where it's lower) and it's also the point at which import VAT starts being charged.

    With orders of £135 or less, exactly how the VAT's accounted for may have changed. In the past, EU businesses with UK sales of less than £70,000/year could account for VAT in their own country – now all EU businesses must account for UK VAT (unless selling to Northern Ireland, in which case the old rules still apply).

    This has caused confusion and problems for some, but the key point is you should only pay the price shown at checkout and shouldn't be hit with any extra fees.

  3. Consignment value of order costs over £135? You may have to pay import VAT, customs duty and handling fees

    Prior to the start of this year, when the UK was following EU rules, if you ordered something from the EU then the price you saw was generally 'all-in' – so aside from delivery costs you shouldn't have faced any extra charges on top.

    Now, if the consignment (total order as outlined above) is over £135, then extra charges may kick in because of the new rules – and it's here where shoppers have been caught out. There are three main types of extra charges you may face:

    • Customs duty – eg, 10%-12% on bags and shoes. Customs duty is a tax on goods coming into Britain. It isn't charged on transactions between different EU countries, so while the UK was still part of the EU (and during the post-Brexit transition) it didn't apply.

      Now though, you will usually have to pay duty on orders over £135, though the exact amount can vary significantly. It may be a percentage of the value of the order, but in other cases it may be based on the weight of the item, sometimes in combination with a percentage.

      While you’ll pay customs duty on most items, some items attract no customs duty even if their consignment value is over £135. This is due to a 'rules of origin' agreement between the UK and EU where goods that have been largely produced or manufactured in an EU country are exempt from customs. These rules are complicated though, so it's best to ask the seller if it it can tell you if customs duties apply or not. You can find more information on Gov.uk. For more info on customs duty rates, see the Gov.uk website.

    • Import VAT – typically 20%, but applies to shipping and duty costs too. Previously, you were simply charged VAT at the point of purchase. But now we're no longer part of the EU, on orders over £135, instead of paying normal VAT you'll be charged 'import VAT' instead, as you're technically importing what you're buying.

      Like normal VAT, import VAT is typically 20%, lower on some items. But crucially you don't just pay import VAT on the cost of the goods. Instead, it's charged on the total cost of shipping the goods to the UK, ie, the price of the goods plus the cost of transportation and customs duty.

      There have also been some changes to the way VAT is accounted for. Prior to this year some EU companies could collect VAT in their own country, but now sellers who sell to those in England, Scotland or Wales are supposed to register for VAT in the UK and collect UK VAT at the item's rate at the point of purchase. (If you're in Northern Ireland, the 2020 rules still apply now – so you may in some cases pay VAT in the EU rather than the UK.)

    • Handling fees from the courier – often £6-12. Previously, courier firms simply delivered items, but now their fees reflect the costs of the extra admin they have to do when taking items through customs. This varies by the courier the retailer uses. For example, Royal Mail charges £8, DPD £5 plus VAT. FedEx charges a fee of 2.5% of the combined customs duty and VAT charge, or £12 – whichever is greater.

    While in some cases, some or all of these costs may be covered by the retailer, they will often be passed on to you as the buyer – and you may be asked to directly pay the courier when it delivers, or at the post office when picking up an item.

    To give an example of how these charges can stack up... a £150 jacket bought from a European online marketplace could attract 12% customs duty (though this varies by item). That's an extra £18. With 20% import VAT charged on top of that (£33.60) and a handling charge of £8 from the courier, the total cost rises to £209.60 – which means almost £60 in extra charges.

  4. Buying something over £135 on Amazon, eBay etc? Check if you're actually ordering from the EU, as if so you may face extra charges

    When you shop on online marketplaces which operate internationally, such as Amazon and eBay, make sure you check if the item you're ordering is actually coming from the EU. If it is, you may face extra charges which it's important to factor in when deciding whether to buy. Amazon, for example, will usually indicate clearly when a purchase is dispatched from overseas.

    Crucially, HM Revenue & Customs warns you WON'T necessarily be told of extra charges such as customs duty and courier fees at the point you order an item, because the seller isn't charging you these directly. So it's important to work out and factor in likely extra charges when you order. If in doubt: 

    • Check where the item is coming from. We've heard several cases of people thinking they were ordering from a UK firm, before later finding out the order has come from France, Italy or another European country.

      Importantly, it's where the item is dispatched from which counts – not where it's manufactured, or where the company you're buying from is based. So if in doubt, check with the seller.

    • Ask the seller first what you're likely to have to pay. They may be able to give you a breakdown of what you're likely to have to pay, especially if they've had similar experiences with other customers.

    • Check the receipt to make sure you don't end up paying charges twice. Even if the retailer can't tell you upfront exactly what customs duty and courier handling fees you'll need to pay, you should be given a breakdown of any VAT or sales tax paid at the point of sale – this should be shown on your receipt.

      Therefore it's important to make sure you check the receipt after you pay, so you know what tax you've already paid. That way if you're asked to pay extra charges by the courier you can make sure you don't pay the same tax twice.

    Check our Cheap Online Shopping guide for more help finding the best prices online.

  5. You can refuse to pay the charges, but you won't get the goods – and may not get a refund either

    If you're hit with unexpected extra charges, you've a number of options. Firstly, you can of course just say you won't pay the extra charges, and not take the item. However, this can be risky. HMRC says if you refuse to pay, the courier firm will usually hold your item for three weeks, but if you don't pay the charges in this period your item will either be returned to the sender or destroyed.

    If the item is returned, the retailer should then refund you its cost. However, there's no guarantee that will happen. Gary Rycroft, a solicitor with Joseph A Jones & Co LLP, who specialises in consumer law, told us that legally speaking the courier is just an 'agent' (ie, a third party acting on behalf of the retailer), so you've not got a right to instruct it to return the goods.

    If the item isn't returned, or is destroyed, you may not be able to get a refund from the retailer – which makes this a risky approach.

  6. A better option may be to pay the charges and return the item – you can then reclaim (most) of the costs

    Alternatively, you can pay the charges to receive the item, then return it and reclaim (most of) the charges. Under consumer laws that apply in the EU, you've a legal right to decide to return goods bought remotely within 14 days of receiving them, and then return them with a further 14.

    However, in order to be able to return the item yourself, you'll likely have to first pay the extra charges to accept it, then send it back at your own expense (unless the retailer's offered free returns). The retailer should refund you the cost of the item, and then:

    • You CAN reclaim import VAT and customs duties. To reclaim the costs, use form BOR 286 if Royal Mail or Parcelforce delivered the goods, or form C285 if it was a different courier.

    • You CAN'T reclaim courier handling fees or the cost of sending the item back.

    You only pay import VAT and customs duty when goods are imported into Britain, so you won't have to pay these again when sending back (technically, exporting) the goods. Theoretically there is a risk that the country you're sending the item back to could levy charges when the goods arrive, which the seller might be forced to pay before the item's returned.

    Lawyers we've spoken to say they've not heard of people being charged for doing this yet, but it could happen in theory. If in doubt, you need to contact the country to check.

  7. Your seller may have prepaid the charges – if so, you may struggle to get a full refund if you return the order

    We've been contacted by some shoppers who say they've bought an item from the EU and returned it, and they've not got a full refund from the seller because the company they ordered from prepaid the customs charges and said these can't be recouped. Here's an example of this below:

    HMRC says any business or individual that pays the customs charges should be able to make a claim for returned goods using the relevant forms (mentioned earlier), whether they are based in the UK or overseas. In this situation, it would be worth speaking to the firm that you've ordered from and seeing if it'll try to reclaim the charges from you.

    Unfortunately, there isn't much precedent for what to do if they won't reclaim the funds for you. Due to this, it's probably worth establishing before you buy an item what the protocol is for returns, and whether you'd able to claim back your customs costs if you do end up returning an item.

  8. If you're hit with charges, it's worth weighing up if you're better off just paying them and keeping the item

    While no one likes unexpected extra costs, it's worth weighing up if you should pay them anyway, keep the item and chalk it up to experience.

    All of the other options outlined above involve either risk or paying courier fees and return delivery, so it may be financially better for you to avoid the risk.

    The best course of action is likely to depend on the value of the item and how big the extra charges are.

  9. Think you've been overcharged on your customs duty and import VAT? You can reclaim the difference

    If you think you've overpaid customs duty and import VAT  paid on goods (for example, if you've had to pay the courier VAT when your receipt from the retailer shows it's already been paid, or you think fees have been wrongly calculated on your order), then you can try to reclaim this money.

    How you reclaim depends on which courier delivered your items:

    • If Royal Mail or Parcelforce delivered the goods, use form BOR 286.

    • If another courier or freight company delivered the goods, use form C285.
  10. There are different rules for gifts – for items worth £39-£135, you may actually pay MORE in extra fees

    The information above relates to goods that you've bought. But if items are sent as a gift, separate rules apply – if the value of the gift is between £39 and £135, you may actually pay more in extra charges than you would if you'd ordered the same item online.

    For an item to qualify as a gift:

    • The gift must be sent from a private person outside the UK to a private person(s) in the UK.
    • There is no commercial or trade element and the gift has not been paid for either directly or indirectly by anyone in the UK.
    • The gift is of an occasional nature only, for example, for a birthday or anniversary.
    • The customs declaration must be completed correctly.

    If an item's classed as a gift, the rules depend on its 'value' (HMRC says this is usually the amount the gift was originally bought for, but for more details see the Gov.uk website):

    • If the total value is below £39, VAT isn't usually charged, though there are exceptions to this for certain items (such as more than a litre of spirits or more than ten cigars). You won't pay customs duty or a courier handling fee either.

    • If the total value is between £39 and £135, VAT must be paid as it would be if you bought the goods. What's more, this will be charged as import VAT, which means you must pay VAT on the cost of shipping etc too, rather than VAT at the point of purchase – so you'll likely pay more than you would if you'd bought the item online.

      You may also have to pay a courier handling fee as you're paying import VAT, but you won't have to pay customs duty.

    • If the total value is over £135, then in addition to the above (import VAT and courier handling fees), customs duty may be charged, as it is with items that are over £135 and sold by a business.

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