Example calculation - import taxes for a set of golf clubs

Example 1: a set of Callaway golf clubs ($600), shipped from the USA to the UK
 

Data
• Let’s buy a set of Callaway golf clubs for a price of $ 600.00 (including sales tax)
• Total Shipping cost is $ 200.00
• The consignment is insured up to $ 500.00 for $ 10.00
• Official exchange rate by customs agencies on June 1st, 2009: 1.56 USD to 1 GBP
• Duty tax rate for golf clubs: 2.70%
• VAT tax rate in the UK: 20.0%

Calculation

Step 1 of 6 - Calculate the customs value
+ $ 600.00 <- price of the golf clubs set including sales tax
+ $ 200.00 <- shipping cost
+ $ 10.00 <- insurance cost
-----------------
= $ 810.00

Step 2 of 6 - Convert into £
$ 810.00 / 1.56 = £ 517.60

Step 3 of 6 - Calculate the import duty
£ 517.60 x 2.70% = £ 13.98

Step 4 of 6 - Calculate the value on which the VAT will be paid
+ £ 517.60 <- customs value of the golf clubs
+ £ 13.98 <- import duty USA to UK
-----------------
= £ 531.58

Step 5 of 6 - Calculate the VAT
£ 531.58 x 20.0% = £ 106.31 

Step 6 of 6 - Total calculation of import duty and VAT 
+ £ 13.98 <- import duty
+ £ 106.31 <- VAT
-----------------
= £ 120.30 

Import duty and VAT for the Callaway set of golf clubs is therefore £ 120.30.

 
The total landed cost equals £ 637.90, that is £ 517.60 plus £ 120.30.

Note: The shipping provider might charge additional fees.