Tariffs and Import Duty in the UK: Not Quite the Same Thing

Julian Evans
14 hours ago
3 min read

When goods cross international borders into the United Kingdom, businesses and consumers often encounter terms like "tariffs" and "import duty". While these terms are related to the costs imposed on these goods, they are not precisely the same. Understanding the distinction is crucial for anyone involved in international trade or purchasing goods from overseas.

Import Duty: The Broader Tax

"Import duty" is a general term that refers to the taxes levied on goods brought into the UK from outside its customs territory. This can encompass several types of charges, including what are specifically known as "tariffs," as well as other taxes like Value Added Tax (VAT) and sometimes excise duty.

Think of "import duty" as the umbrella term for all potential taxes you might have to pay when importing goods.

Tariffs: A Specific Type of Import Duty

A "tariff" is a specific type of tax imposed on imported goods. It is usually a percentage of the value of the goods (an ad valorem tariff) or a specific amount per unit (a specific tariff). Historically, tariffs were a significant source of government revenue, but today, they are more often used to protect domestic industries from foreign competition by making imported goods more expensive.

The UK Global Tariff (UKGT) outlines the tariff rates applicable to goods imported into the UK unless there's a trade agreement with the exporting country or a specific exemption applies. For example, as of today, May 12, 2025, the UK has a new economic deal with the United States which has significantly reduced or eliminated some tariffs, such as those on automobiles and steel. Previously, the US had imposed a 10% baseline tariff on most UK goods.

Key Differences Summarized:

Scope: Import duty is a broader term covering all taxes on imports, while a tariff is a specific type of tax within that scope.
Nature: Tariffs are typically focused on protecting domestic industries or as part of trade negotiations. Import duty is the overall fiscal imposition on bringing goods into the country.
Components: Import duty can include tariffs, VAT, and excise duty, depending on the goods.

In the UK Context:

When you import goods into the UK, you might be liable to pay:

Customs Duty (Tariff): This is a tariff based on the type and origin of the goods, as specified in the UKGT. The rate can vary significantly depending on the product and the country it comes from. For goods valued over £135, customs duty may apply.
Import VAT: This is Value Added Tax charged on the imported goods and is calculated on the total value, including the price paid, shipping, insurance, and any customs duty owed. For goods valued over £135, import VAT is usually applicable. For gifts over £39 and goods over £135, VAT is generally charged.
Excise Duty: This applies to specific goods like alcohol, tobacco, and hydrocarbon oils, whether imported or domestically produced.

Example:

Imagine a UK business importing wine from a country with which the UK does not have a free trade agreement. They might have to pay:

A tariff (customs duty) based on the UKGT rate for wine.
Import VAT calculated on the value of the wine plus the shipping costs and the customs duty.
Excise duty because wine is an alcoholic beverage.

In this case, the total "import duty" paid would be the sum of the tariff, the import VAT, and the excise duty.

In Conclusion:

While the terms are often used in the context of goods entering the UK, "tariff" refers specifically to a tax on imports, often aimed at protecting domestic industries or as a tool in trade policy. "Import duty" is the more encompassing term that can include tariffs along with other taxes like VAT and excise duty. When dealing with international trade in the UK, it's important to understand which of these charges apply to your specific goods to accurately calculate the costs involved. You can use the UK Trade Tariff service to look up the specific duties and VAT rates for different goods.