How to Find the Right Commodity Codes for Your Imports and Exports
If you are importing or exporting goods to or from the UK, you need to find the right commodity codes for your products. Commodity codes are internationally recognised reference numbers that describe a specific product and determine the rate of Customs Duty and import VAT taxes. They also help you check if you need a licence to move your goods, if you could pay less Customs Duty, or if your goods are covered by any special measures.
Finding the right commodity code for your goods can be complicated, but it is essential to avoid delays, penalties, or incorrect payments. In this article, we will explain what a commodity code is, how to use the HMRC Trade Tariff tool to find one, and what to do if you are not sure how to classify your goods.
What is a commodity code?
A commodity code is a 10-digit number that identifies a specific product when importing or exporting goods. The first six digits are based on the Harmonized System (HS), which is an international standard for classifying goods. The next two digits are based on the Combined Nomenclature (CN), which is a European classification system. The last two digits are based on the Integrated Tariff of the United Kingdom (UK), which is specific to the UK.
A commodity code consists of different elements based on:
- the type of product
- the material used to make it
- the production method
For example, the commodity code for fresh apples is 0808 10 00 00, where:
- 08 is the HS chapter for edible fruit and nuts
- 0808 is the HS heading for apples, pears and quinces
- 0808 10 is the CN subheading for apples
- 0808 10 00 is the UK subheading for fresh apples
- 0808 10 00 00 is the full UK commodity code for fresh apples
How to use the HMRC Trade Tariff tool to find a commodity code
You can use the HMRC Trade Tariff tool to find the right commodity code for your goods. You can access the tool at https://www.gov.uk/trade-tariff.
To use the tool, you will need details of the product you are importing or exporting, such as:
- the type of product
- what the product is used for
- the materials used to make it
- how it is produced
- the way it is packaged
You can enter these details in the search box or browse through the categories and subcategories until you find a match. You can also use filters to narrow down your results by country, date, or measure type.
Once you find a suitable commodity code, you can click on it to see more information, such as:
- the rate of Customs Duty and import VAT taxes
- any preferential rates that may apply
- any licences or certificates that may be required
- any suspensions or reductions that may be available
- any agricultural policy, anti-dumping duties, UK safeguarding measures, or tariff quotas that may apply
You can also use the tariff duty calculator to estimate your import costs and identify any available preferences or other measures.
What to do if you are not sure how to classify your goods
Some goods are more difficult to classify than others, especially if they are:
- made of more than one material
- composed of different parts
- used for multiple purposes
- new or innovative
If you are not sure how to classify your goods, you can:
- check the guidance on hard to classify goods at https://www.gov.uk/guidance/how-to-classify-certain-goods-for-import-and-export
- use the A to Z of classified goods at https://www.gov.uk/guidance/a-to-z-of-classified-goods-to-find-commodity-codes-for-common-products
- contact HMRC’s Tariff Classification Service at [email protected] or call 0300 200 3700
- apply for a Binding Tariff Information (BTI) decision at https://www.gov.uk/guidance/apply-for-a-binding-tariff-information-decision
A BTI decision is a legally binding ruling that confirms the correct commodity code for your goods. It can take up to 120 days to receive a BTI decision and it is valid for three years.
Finding the right commodity code for your imports and exports is crucial to comply with customs rules and pay the correct amount of tax and duties. You can use the HMRC Trade Tariff tool to look up commodity codes, duty and VAT rates, and other relevant information. If you are not sure how to classify your goods, you can check the guidance on hard to classify goods, contact HMRC’s Tariff Classification Service, or apply for a BTI decision.
The Impact of Brexit on the UK Trade Tariff
One of the major consequences of the UK’s departure from the European Union (EU) is the change in the trade tariff regime that applies to goods imported into or exported from the UK. The trade tariff is a system of classification and taxation of goods that determines how much duty and VAT are payable, as well as whether any preferential rates, quotas, suspensions or other measures apply. The trade tariff also helps to identify if any licences or certificates are required to move the goods across borders.
Before Brexit, the UK was part of the EU’s customs union and single market, which meant that it followed the same trade tariff as the other 27 member states. This meant that there were no customs duties or checks on goods moving between the UK and the EU, and that the UK had to apply the same tariffs and rules to goods coming from outside the EU. The UK also benefited from the trade agreements that the EU had negotiated with other countries, which often reduced or eliminated tariffs on certain products.
However, after Brexit, the UK has left the EU’s customs union and single market, and has become a separate customs territory with its own trade tariff. This means that the UK can set its own tariffs and rules for goods coming from outside the UK, but it also means that there are now customs duties and checks on goods moving between the UK and the EU, unless they qualify for preferential treatment under the Trade and Cooperation Agreement (TCA) that was agreed in December 2020. The UK also has to negotiate its own trade agreements with other countries, which may differ from those of the EU.
The UK Trade Tariff Tool
To help businesses and individuals find out how much duty and VAT they may have to pay when importing or exporting goods, HM Revenue & Customs (HMRC) has developed a Trade Tariff tool that is available online. The tool allows users to look up commodity codes for their products, which are internationally recognised reference numbers that describe specific goods. The tool also provides information on:
- The rate of duty and VAT applicable to each commodity code
- Any preferential rates, quotas, suspensions or other measures that may apply
- Any licences or certificates that may be required
- Any agricultural policy, anti-dumping duties, safeguarding measures or tariff quotas that may affect the goods
The tool also includes a tariff duty calculator that can estimate import costs and identify available preferences and other measures that may be applicable. Users can access the tool at: https://www.gov.uk/trade-tariff
The tool is updated regularly to reflect any changes in the trade tariff regime, such as new trade agreements, tariff suspensions or amendments. Users can provide feedback on the tool to HMRC by emailing: [email protected]
The Trends in Global Demand for UK Trade Tariff Goods
The global demand for goods that are subject to the UK trade tariff is influenced by various factors, such as economic growth, consumer preferences, exchange rates, trade policies and geopolitical events. According to the latest statistics from HMRC, in 2020, the total value of UK imports of goods was £420 billion, while the total value of UK exports of goods was £291 billion. This resulted in a trade deficit of £129 billion in goods.
The main trading partners of the UK in 2020 were:
- The EU, which accounted for 47% of UK imports and 42% of UK exports
- The US, which accounted for 11% of UK imports and 19% of UK exports
- China, which accounted for 10% of UK imports and 4% of UK exports
- Switzerland, which accounted for 5% of UK imports and 3% of UK exports
- Norway, which accounted for 3% of UK imports and 1% of UK exports
The main categories of goods that were imported into and exported from the UK in 2020 were:
- Machinery and transport equipment, which accounted for 31% of UK imports and 42% of UK exports
- Chemicals and related products, which accounted for 15% of UK imports and 14% of UK exports
- Miscellaneous manufactured articles, which accounted for 14% of UK imports and 12% of UK exports
- Mineral fuels, lubricants and related materials, which accounted for 9% of UK imports and 5% of UK exports
- Food and live animals, which accounted for 9% of UK imports and 6% of UK exports
The trends in global demand for these goods vary depending on the market conditions, consumer behaviour and policy developments in different regions and countries. For example:
- The demand for machinery and transport equipment may increase as a result of economic recovery, technological innovation and environmental concerns
- The demand for chemicals and related products may decrease as a result of regulatory restrictions, health and safety issues and environmental awareness
- The demand for miscellaneous manufactured articles may fluctuate as a result of changing fashion trends, consumer preferences and disposable income
- The demand for mineral fuels, lubricants and related materials may decline as a result of energy transition, climate change and renewable sources
- The demand for food and live animals may grow as a result of population growth, dietary changes and food security
The UK trade tariff regime affects the competitiveness and profitability of UK businesses that import or export these goods, as well as the prices and availability of these goods for UK consumers. Therefore, it is important for businesses and individuals to keep track of the changes in the trade tariff regime and the trends in global demand for their products, and to use the Trade Tariff tool to find out how much duty and VAT they may have to pay.
References:
https://www.gov.uk/trade-tariff
https://www.gov.uk/guidance/finding-commodity-codes-for-imports-or-exports
https://www.gov.uk/government/statistics/uk-trade-in-goods-statistics-by-business-characteristics-2020
https://commonslibrary.parliament.uk/new-customs-rules-for-trade-with-the-eu/
https://www.gov.uk/trade-tariff
https://www.gov.uk/guidance/finding-commodity-codes-for-imports-or-exports
https://www.nibusinessinfo.co.uk/content/trade-tariff-look-commodity-codes-duty-and-vat-rates
https://www.simplybusiness.co.uk/knowledge/articles/2023/03/what-is-a-commodity-code/
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