Post-Brexit rules came into force on 1st January 2021, despite the Free Trade Agreement with the EU, the UK is now facing new taxes and charges on goods sent between the EU and the UK.
Many UK consumers have been faced with unexpected charges, in order to receive their goods. As the UK is no longer a part of the EU VAT regime, the UK government is now applying 20% VAT on goods from the EU. The new charges apply to goods including, gifts, products bought from Amazon or eBay and second hand items. The new VAT charge will be applied at the point of sale, for goods worth under £135. However, for goods over £135, the VAT is applied when the goods reach the buyer.
It is important to note that under the Free Trade Agreement, goods bought from the EU, that have originated in the EU, will not be subject to customs duty charges. However, goods that are sold from the EU, but have not originated in the EU, will be subject to customs duty charges under the ‘Rules of Origin’. The ‘Rules of Origin’ apply to goods over £135, from outside the EU.
The added unknown costs are causing some buyers to return their goods back to the EU sellers. When goods are returned to the seller, they face costly duties as well as customs paperwork to complete. Some smaller businesses have stopped exporting to the EU because of the new customs process and charges. The UK faces the same issue, as some EU businesses are no longer exporting to the UK, in order to avoid costly charges.