Customs, duty and VAT on a car from Hong Kong

Customs sounds like the hard bit. Forms, rates, a port somewhere and an officer with opinions. In practice it is mostly arithmetic and paperwork, and both can be done before the ship docks.

We are fully authorised HMRC CDS customs agents with our own in-house team, so for most people customs is something we do rather than something you do. It still helps to know what is being charged and why, so the number on your quote makes sense.

What is charged

A car coming from Hong Kong to the UK normally pays two things:

• import duty at 10% of the car’s value
• import VAT at 20%

The VAT is the bigger of the two, because it is charged on more than the car. It is worked out on the car’s value, plus the cost of getting it to the UK (the freight and insurance), plus the duty. That is why a calculator that only takes 20% of the price will come out short.

A worked example

Say the car is worth £20,000 and shipping and insurance to the UK come to £1,500.

• Duty is 10% of £20,000, which is £2,000.
• VAT is charged on £20,000 plus £1,500 plus £2,000, which is £23,500.
• VAT at 20% of £23,500 is £4,700.

The tax comes to £6,700. Our duty and VAT calculator runs exactly the same sums with your own figures, and it is the same method we use on our quotes.

Why we assume the full 10%

The UK has no trade deal with Hong Kong itself. A lower duty rate only applies if a car can prove it was made somewhere that has one, with paperwork from the original exporter, and a used car coming out of Hong Kong very rarely has that. So we quote the standard 10% and tell you if yours turns out to be the exception. We’d rather that than a surprise at the port.

When it can be less

There are two reliefs that make a real difference.

Moving home to the UK. Transfer of Residence relief lets people moving their main home here bring their belongings, including a car, with no duty and no VAT. GOV.UK sets the conditions: you have lived outside the UK for at least 12 consecutive months, the car has been in your possession for at least 6 months before you move, it is for private use, and it is imported within 12 months of you coming to live here. You cannot lend it, hire it out, use it as security or pass it on for 12 months after the move.

The relief has to be approved by HMRC through the ToR1 form before the car ships, so this is the first thing we ask about. Our ToR checker shows where your dates stand.

Historic cars. A car over 30 years old, in original condition and of historical interest, can come in with no duty and VAT at 5%. On the example above, that is 5% of £21,500, or £1,075. HMRC decides what counts, and we prepare the evidence with you. Our guide to classic cars from Hong Kong goes into more detail.

Telling HMRC: NOVA

Separately from the customs entry, HMRC has to be told about any vehicle brought into the UK permanently. This is the Notification of Vehicle Arrivals, or NOVA, and GOV.UK gives 14 days from the car arriving to do it. Late notification can mean a fine, and the DVLA cannot register the car until HMRC has processed it.

When we clear the car, we make the NOVA notification for you. If you have shipped a car yourself and it has already been cleared, check that someone has done it, and if nobody has, talk to us straight away.

What we do, and when

As your customs agent, we prepare the entry before the ship docks. When the car arrives, we pay the duty and VAT on your behalf if any is due, claim your relief if you have one, make the NOVA notification and bring the container to our site in Castle Donington. Because the paperwork is ready before the car is, the container does not sit at the port waiting for it.

All of this is itemised on your quote, with the tax as its own line. Get a quote and you will see exactly what yours comes to.