Duties are a type of tax on goods entering or leaving a country, while taxes are charges placed on almost all purchases. Both contribute to the total import and export costs of a product.

Customs officials rely on the following factors to calculate duty and tax amounts:

• HS code
  Among industry classification systems, Harmonized System (HS) Codes are commonly used throughout the export process for goods. The Harmonized System is a standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics. Learn more at trade.gov.
   
• Total value of goods
  This includes any freight or insurance fees.
   
• Description of goods
  Found on the commercial invoice, this includes the product's intended use and country of origin. To make sure the goods are classified correctly, the HS code and goods description should match.
   
• International trade agreements
  These can influence the amount of taxes and duties on a shipment. If you're shipping goods between nations (or nations and states) that share a trade agreement, for example, then they may be exempt from duties or eligible for a reduced rate.
   
• Incoterms
  Found on the commercial invoice, these define the agreement between sender and receiver about who pays for shipping costs, including taxes and duties. Learn more about Incoterms and how to apply them correctly.

Customs clearance professionals like the team at AIT have the tools and expertise to accurately calculate duties. In general, the process involves searching gov.uk to find the precise duty percentage rate for the commodity being shipped. Then, the value of goods is totaled (including freight costs, insurance and any additional costs). Finally, the total is multiplied by the duty rate to determine the amount paid to customs.

The first step involves determining the sales tax (VAT) rate. For example, the United Kingdom has three VAT rates: 0%, 5% and 20%.

To calculate total taxes due to the United Kingdom, the value of goods being shipped is added up (including freight costs and insurance), import duty cost is added, then the total is multiplied by the VAT rate.

There are many additional factors that can impact the final calculation, so it's best to rely on an experienced supply chain solutions partner like AIT to manage this process.

Typically, you must pay duties and taxes due before your freight is released from customs. However, a freight forwarding partner or carrier may be able to pay on your behalf to keep the shipment moving smoothly, then invoice you for the charges.

Depending on import volumes and documentation organization, the U.K. customs clearance process can range from minutes to weeks. Attention to detail on your documentation can help ensure speedy processing for your freight.

Before you partner with a freight forwarder like AIT to secure customs clearance into the United Kingdom, you'll want to gather:

• Evidence of the goods you're importing or exporting, for example, invoices or contracts
• Evidence of any goods you intend to import or export, for example, invoices or contracts
• Description of the goods you import or export
• Appropriate licenses or certifications
• Your EORI number