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Example calculation - import duty & taxes for a guitar and amp

Example 2: electric guitar and amplifier from USA to UK

Data:
• Product price: electric guitar US$600.00 and amplifier US$400.00 (including sales tax)
• Shipping cost: US$200.00
• Insurance cost: US$10.00
• Exchange rate: 1.56 USD to 1 GBP
• Duty rate for electric guitar: 3.7%
• Duty rate for amplifier: 2.7%
• VAT rate in the UK: 20%

Calculation:

Step 1 of 9 - Calculate the customs value 
The customs value in UK is CIF:

+ $   600.00 <- price of electric guitar 
+ $   400.00 <- price of amplifier 
+ $   200.00 <- shipping cost
+ $     10.00 <- insurance cost
-----------------
= $ 1,210.00 


Step 2 of 9 - Split the shipping cost and insurance cost between the guitar and the amplifier
The value of the guitar is 60% of the total value of the goods, therefore: 
• shipping cost allocated to guitar = $200.00 x 60% = $120.00
• insurance cost allocated to guitar = $10.00 x 60% = $6.00

The value of the amplifier is 40% of the total value of the goods, therefore: 
• shipping cost allocated to amp = $ 200.00 x 40% = $ 80.00
• the insurance cost allocated to amp = $10.00 x 40% = $ 4.00

Step 3 of 9 - Calculate the customs value per item
• electric guitar: 
+ $ 600.00 <- product price 
+ $ 120.00 <- shipping cost
+ $    6.00 <- insurance cost
-----------------
= $ 726.00

• amplifier: 
+ $ 400.00 <- product price 
+ $ 80.00 <- shipping cost
+ $   4.00 <- insurance cost
-----------------
= $ 484.00

Step 4 of 9 - Convert into GBP
• electric guitar: 
$726.00 / 1.56 = £465.38 

• amplifier:
$484.00 / 1.56 = £310.25 

Step 5 of 9 - Calculate the import duty
• electric guitar: 
£465.38 x 3.7% = £ 17.21 

• amplifier: 
£310.25 x 2.7% = £ 8.37

Step 6 of 9 - Calculate the value on which VAT will be paid
• electric guitar: 
+ £ 465.38 <- customs value of electric guitar
+ £   17.21 <- import duty 
-----------------
= £ 482.59 

• amplifier: 
+ £ 310.25 <- customs value of amplifier
+ £     8.37 <- import duty 
-----------------
= £ 318.62 

Step 7 of 9 - Calculate VAT
• electric guitar
£482.59 x 20% = £96.51

• amplifier
£318.62 x 20% = £63.72

Step 8 of 9 - Total import duty and VAT per item
• electric guitar
+ £  17.21 <- import duty
+ £  96.51 <- VAT
-----------------
= $ 113.72 

• amplifier
+ £    8.37 <- import duty
+ £  63.72
 <- VAT
-----------------
= $  72.09

Step 9 of 9 - Total Import Duty & VAT 
+ £ 
113.72 <- import duty and VAT for electric guitar
+ £   72.09
 <- import duty and VAT for amplifier
------------------
= £ 185.81

Total import duty and VAT for the guitar and the amplifier is therefore £185.81
.


The total landed cost is:
+ £ 775.63 <- total cost of the guitar, the amplifier, shipping and insurance in GBP 
+ £ 185.81
 <- total import duty and VAT on the guitar and the amplifier
------------------
= £ 
961.44

Note: The shipping provider might charge additional handling fees.

 

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