Duties are a type of tax levied on goods that are shipped across borders, while taxes are charged for goods shipped from other countries. These may be charged at the point of import. While this blog post will mainly focus on the duties and taxes charged in the UK through FedEx shipments, you will also gain a general overview of some of the other common taxes faced by the general population on a regular basis.

What Are FedEx Duties And Taxes?

When goods are brought into a country, there are certain customs duties and taxes levied upon them by the government.  The reason why duties are levied is to make sure that goods imported from other countries do not impact the sales and prices of locally produced goods and to keep competition fair. 

There are times when consumers find themselves billed for such duties and taxes by FedEx; however, these are not applied by the company rather their own governments. There are times when FedEx pays these in advance and bills you for reimbursement along with their service charges that are called Disbursement Fee. 

Customs charges in the UK are based on the following factors:

  • Country of manufacture
  • Country-specific regulations
  • Description and end-use of product
  • Product value
  • Trade agreements (if applicable)
  • The product’s Harmonised System (HS) code

It must be noted that any additional charges in excess of the cost of the shipped goods are declared by the company to the shipper who aims to send goods overseas and has the choice of bearing such charges by making a pre-payment, forwarding them to the receiving party or mentioning a third party who is responsible for payment of duties and taxes. 

This choice of payment depends on (a) the terms of the agreement between both parties who are to send and receive goods and (b) whether or not the receiver has a FedEx account as non-account holders will not be able to make a payment. Ins such cases, the shipment is held at the destination and not delivered to the intended recipient until duties and taxes are paid.

Below are details of these charges and their rate of application in the UK::

Disbursement FeeDuty and Tax
30% of the Duty & Tax amount with a minimum of 4.25 GBP0 – 42.50 GBP
A flat fee of 12.75 GBP42.50 – 510 GBP
2.5% of the Duty and Tax amountAbove 510 GBP

Consumer advice regarding postal services can help you learn more about specific charges.

How Are FedEx Duties And Taxes Calculated?

While calculations for duties and taxes are generally complex by nature, below is a general overview.

If someone from outside the UK is shipping goods they are required to provide a commercial invoice to FedEx to declare the exact monetary value of the goods. The amount is then converted to its value in GBP, based on the foreign exchange rate at the time.

The cost of transport, insurance and any other additional costs that may apply (depending on the nature and volume of goods being shipped) are then added to the initial value of the goods. This is known as the Customs Value; which determines the Customs Duty. 

There are certain items on which additional charges such as Excise Duty, Anti-Dumping Duties and CAP (Common Agricultural Policy) may need to be applied. This will increase the Customs Value of such product(s).

At the next stage, the Value Adjustment amount; commonly known as VAT is added to the Customs Value, resulting in the VAT value.

You can calculate Customs Duties and Taxes on an import into the UK through FedEx online by adding values to the given formulae.

How Much Tax Do I Have To Pay In The UK?

According to a general estimate, an individual pays one-third of their income in the form of taxes in the UK. While the amount of tax one pays depends on the scale of their income, some people will pay a higher tax perhaps due to the property that they own or inheritance that they may receive.

There are different types of taxes under the UK taxation system. Direct taxes include PAYE (Pay As You Earn) and National Insurance. These account for 20 per cent of an individual’s income. On the other hand, indirect taxes include VAT, council tax as well as duties on alcohol and petrol. 

Therefore, basic taxes in the UK include the following:

  • Income Taxes 
  • Property Taxes 
  • Capital Gains 
  • UK Inheritance Taxes 
  • Value Added Tax 

These are all progressive taxes; which means that the scale of taxes increases with an increase in income.

How Much Income Tax Do I Have To Pay In The UK?

Direct taxes such as income tax are automatically deducted from your wages, income or pension before you receive them. This is termed as Pay As You Earn. Anyone earning equal to or less than £12,750 is not eligible for PAYE as the amount is considered under the law as an individual’s personal allowance. 

Incomes above the minimum cap are taxed at an incremental rate of 20 per cent to 45 per cent depending on whether an individual belongs to the basic, higher or additional tax rate band. Below are details of these bands:

  • 0 per cent income tax when income is up to £12,570
  • 20 per cent income tax when income is between £12,571 and £50,270 
  • 40 per cent income tax when income is between £50,271 and £150,000 
  • 45 per cent income tax when income is above £150,001

If you are self-employed, you are required to file a self-employed tax return in order to pay your taxes through a self-assessment. 

Who Has To Pay Property Tax?

According to The complete guide to the UK tax system | Expatica the UK has the second-highest property taxes in the world at the moment and tax revenue through this model accounts for more than 12 per cent of all tax collections.

The two forms of property tax in the UK include stamp duty and council tax. Stamp Duty tax is paid when someone buys a property in the UK over a certain threshold. The tax applies to residential properties that have a market value of above £125,000, or to non-residential land and properties that are valued at more than £150,000. Here is an online calculator to help with your property tax assessment. 

Council tax is a local tax collected by the local council to provide community-based services to their residents.

What Is A Capital Gains Tax?

Whenever someone sells an asset, there is a difference between the purchase price and the selling price. If you receive gain while selling, this is a capital gain and the incremental amount will be taxed. These may include the following:

  • Personal possessions that are valued at or above £6,150 (does not include vehicles)
  • Real estate property that cannot be claimed as your main home
  • Your main home if it is being rented or used for business
  • Shares (those which are not in an ISA or PEP)
  • Business assets
  • Cryptoassets (only in certain cases)

How Is Car Tax Paid?

Car owners receive a reminder from the Driver and Vehicle Licensing Agency around three weeks before their vehicle tax is about to expire. This is called a V11 reminder. This letter can be taken to the nearest local post office which has car tax facilities and used as a reference to pay your car tax. If a vehicle owner loses their V11 letter, they can use their 11 digit reference number from their logbook known as V5C.

If you have purchased or registered a car to your name, you will be required to apply for a Vehicle Excise Duty (VED). Otherwise, the DVLA will send you a V11 reminder to do so. The purpose of this reminder is to set up your vehicle tax. You will receive an annual reminder to renew your car tax.

Anyone with a roadworthy vehicle in the UK is required to pay road tax (also referred to as car tax, vehicle tax or road fund license. This is a mandatory, annual payment enforced by the Driver and Vehicle Licensing Agency. The amount due on a vehicle owner depends on the type of vehicle they drive as well as the level of co2 emissions from their car.

Who Collects Tax Revenues In The UK?

The HMRC collects and administers tax collection in the UK. HMRC administers the following central taxes while local governments collect council tax:

  • Income tax
  • Corporation tax
  • Capital gains tax
  • Inheritance tax
  • Insurance premium tax
  • Stamp, land, and petroleum revenue taxes
  • Environmental taxes
  • Climate change and aggregates levy and landfill tax
  • Value-Added Tax
  • Customs duty
  • Excise duties

Conclusion:

Duties and taxes are decided on firstly on the basis of the value of goods being shipped overseas but secondly also on the basis of the rates and application guidelines decided and monitored by each country’s customs authorities. In the case of the UK, this would be the HM Revenue and Customs. Therefore, the calculation will vary depending on the nature and volume of goods being sent across, the intent for which they are being sent (personal consumption or commercial) as well as the current duties and taxes. To maintain a broad view of the impact of such duties and taxes one may need to keep track of other taxes and mandatory payments that they are liable for under the UK taxation system. For this purpose, some of the more common taxes are discussed in this article. 

FAQs: What Are FedEx Duties And Taxes?

What is a duty and tax FedEx?

Duties are a type of tax levied on goods that are shipped across borders, while taxes are charged for goods shipped from other countries. These may be charged at the point of import. 

Why did I get a duty and tax invoice from FedEx?

There are times when FedEx pays these in advance and bills you for reimbursement along with their service charges that are called Disbursement Fee. 

What happens if I don’t pay FedEx import tax?

If you do not pay FedEx tax as a recipient, your shipment will remain at the destination and will not be delivered to you or cleared for transfer. 

Do you have to pay duty to FedEx?

Yes, if goods worthy of duties (or taxes) are being exchanged across borders, you will be required to pay the amount to FedEx to attain possession of the goods.

Does FedEx charge tax on shipping?

Yes, FedEx charges taxes on shipping items overseas and declares the amount when a shipper books a consignment for shipment.

References:

Customs duties and taxes guide | FedEx United Kingdom

Why do I have to pay Duty and Tax? – FedEx | United Kingdom

How can I pay my duties and taxes? – FedEx – Frequently Asked Questions

Duties and Taxes Invoice Guide

How do you calculate Customs Duties and Taxes on an import into the UK? – FedEx – Frequently Asked Questions

Why do I have to make a pre-payment of import Duties & Taxes? – FedEx – Frequently Asked Questions

Check how to pay duties and VAT on imports – GOV.UK

DVLA-car tax

Income tax calculator 2022-23, 2021-22 and 2020-21

UK Tax Calculators

HM Revenue & Customs – GOV.UK

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