Tariff

Generally, all goods imported into the UK are subject to the UK Global Tariff (UKGT). A tariff is a tax or duty imposed by one country’s government on goods and services imported from another country.

The tariff makes imported goods and services more expensive to buy because the importers have to recoup the tax and duty paid.

ProsCons
Protect local businesses by giving them a better chance to compete in the industry. They can charge a lower price to increase demand. Imported goods and services become more expensive
Protect domestic manufacturers and employ local people Importers may stop importing if demand is low because they have to charge expensive price tags, which leads to loss of income for the government.
More money for the government through collecting import taxes and duties.

No Tariff to pay

There are situations where the UK global Tariff does not apply to your imported goods.

Free Trade agreement

You are importing goods from a country that has a trade agreement with the UK. For example, The UK has already signed a free trade agreement with Japan on 23 October 2020. You can read more about the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) on GOV.UK website.

Tariff Suspension

The UK helps businesses to remain competitive in the global market by suspending import duties on certain goods. Usually, these goods are used in domestic production. For example, The Uk suspends all tariffs on a group of medical items critical in the response to COVID-19 on 1 January 2021. The suspension is for 12 months on all goods listed by the World Health Organisation (WHO) as critical goods would have 0% duty. For example, surgical gloves under the commodity code of 40151100 are 0% duty.

Imports from country under the UK Generalized Scheme of Preferences

The UK reduces or removes import tariffs on imports from developing countries classified by either the United Nations (UN) or the World Bank as low-income and lower-middle income countries. For example, The UN classified Madagascar as the least developed country. Imports from Madagascar have quota-free access and nil rates of import duty.

Department for International Trade

If you would like to export or import goods or services into and out of the UK, the UK Department for International Trade (DIT) can help you. The DIT provides the following services to businesses wanting to export out of the UK or import from overseas.

  • Create an export plan
  • Find an export market
  • Choose a route to market
  • Get export finance
  • Manage payments for export orders
  • Prepare to do business in a foreign country
  • Prepare for export procedures and logistics
  • Sell services overseas
  • Manage risks of bribery and corruption

There are UK Department for International Trade offices worldwide and also DIT offices around the UK that you may contact to ask for help.

Use Trade Tariff Tool to find Commodity code for Customs declaration

You would require to find the right commodity code for your goods to complete your customs declaration paperwork. Your commodity code will tell you the correct Customs Duty and import VAT to pay.

You may use the HMRC Trade Tariff tool to look up your commodity code. For example, a commodity code for the import of unworked Sapphire is 7103100000. The goods are subject to 20% VAT and 0% duty if it is subject to a third country duty.

You can handle your customs declaration paperwork yourself or you may hire freight forwarders, customs agents or brokers, or fast parcel operators to handle your customs declaration paperwork for you. The person or business you hire to represent you must be established in the UK.

Usually, duty must be paid before your goods can be released unless you have a duty deferment account with HMRC.

Import goods under your company’s name

You must ensure all the legal filings such as Confirmation Statement, company accounts, and corporation tax returns are up to date with Companies House and HMRC if importing using your company’s name.

Bring cash in and out of the UK

You must declare to the Customs Authorities if you bring cash in and out of the UK of more than £10,000. It does not matter if your cash is for personal use or for business use. For example, you are traveling to London Heathrow Airport from Singapore Changi Airport and you are bringing £8000 traveler’s cheque and Pound Sterling Currency notes of £3000 in cash and some Singapore dollars of $2000.

Declare your cash to Customs online

You must declare the total cash you bring into the UK up to 72 hours before you cross the UK borders. You can do it online via GOV.UK website. In brief, your declaration is to tell Her Majesty Revenue and Customs (HMRC) about who owns the cash is, where it has come from and what it will be used for.

The information about the person who travels with the cash in and out of the UK

You would require the following information about yourself to complete the declaration.

  • Passport number
  • Full name
  • Nationality
  • Place of birth
  • Country of birth
  • Occupation
  • Date of birth

The currencies you bring in and out of the UK

Let’s say you are entering the UK from Singapore, transit at Hong Kong and you bring £8000 in a cheque, £3000 in cash, and SGD $2000 in cash.

You must declare in your online declaration form each currency type you are bringing into the UK.

Currency type Pound Sterling (GBP £) Singapore Dollar (SGD $)
Value in Notes and coins £3000$2000
Value in Cheques & Traveller’s cheques£8000$0
Value in Bankers’ drafts£0$0
Total value£11,000$2000

Your flight journey

You must specify whether you are entering or leaving the UK with the cash. this includes how you are going to travel in the UK whether by air, sea, or channel tunnel.

In addition, you must also provide your flight information. In this example, the airport you will start your journey would be Singapore Changi Airport and your destination airport would be London Heathrow Airport.

If your flight journey includes transit at another airport in another country between Singapore and London, you must disclose that information also. For example, your flight from Singapore will stopover at Hong Kong International Airport before heading to London Heathrow.

If you cannot remember the airport’s names, do not worry the Gov.UK online form already have airports’ names and countries listed in their database, when you type the closely match airports and countries will appear for you to select.

Your cash origins

Correspondingly, you must let HMRC knows which country your cash was generated in. For example, the cash you bring into the UK is the sales receipts from your Singapore company then you specified your cash is generated in Singapore.

The next question HMRC would ask you is that do you own the cash? If you personally own the cash then declare that fact by choosing “yes”.

If you do not owns the cash then you must disclose who owns the cash. a family member or a friend or a business. Say your cash is owned by a UK company. You must provide the UK company name, industry, and address in the UK. If you cannot remember the UK company’s information, contact Companies House.

Subsequently, you must disclose if you are intending to give your cash to someone else or you are paying for goods or services. Say if you paying for your UK accountant to set up your UK company, filing your confirmation statement and company accounts to the UK authorities. This is considered paying for services.

However, if you are intending to give your cash to someone else then you must provide information about the recipient whether a business or an individual.

A businessAn Individual
Company nameFull name
Industry the company operates inOccupation
Address (UK or overseas)Address (UK or overseas)

Thereafter, you must declare what business purpose the cash will be used for? For instance, to buy commercial vehicles or parts, pay wages, business expenses, or other business costs.

Finally, you will be asked to provide your email address where HMRC will send a confirmation including your submission reference number that they have received your application. You would need to save this information.

How to change company authentication code

You can change your company’s authentication code at any time. How to change your company authentication code with Companies House is easy. Follow the step-by-step guide below.

Change company authentication

StepsAction to take
1You must log in to Companies house’s web filing service using your email address and password registered with Companies House for web filing service.
2You must also enter your company number and the authentication code issued by Companies House if this is the first time you are changing your authentication code.

If you have misplaced your original authentication code issued to your company by Companies House, you can request it again. It will be sent to your company’s registered office address.
3Once login into the web filing service dashboard, you will see “company authentication” on the left-hand menu. Click on it.
4You will be asked to choose a new 6 character code and re-enter the code again. then you click the “change code” button to activate the change.

Take note that Companies House will send a letter to your registered office address to confirm your authentication code has been changed. For this reason, it is important you make sure you are able to access mails sent to your company’s registered office address.
5 all done.

It is very important you treat your authentication code like your debit card and credit card pin because anyone who has access to your authentication code can file information for your company with Companies House.

Correspondingly, If the person is no longer authorized to file information for your company then change your authentication.

Prefer papers filings

If you prefer to submit papers filings instead of electronically with Companies House, you can cancel your authentication code.

Tick the box “I wish to cancel the company authentication code”. Then click the “cancel code” button. Take note that once you cancel your authentication code, you will not be able to submit your confirmation statement, company accounts, director appointment, and so on electronically.

Bike repair voucher

The UK government launched the bike repair voucher scheme called “Fix your bike voucher scheme” as part of their effort to encourage people to cycle rather than use private cars for short journeys. Cycling not only keeps you fit but also reduce air pollution compared to driving a car.

If you have an unused bike that requires repair you can get the bike repair voucher to pay for your bike repair. The voucher is worth £50. You can use the voucher to pay for your bike repair costs. The Fix your bike voucher scheme is for anyone living in England.

Types of bike repairs

The voucher covers the following repairs costs:

Inspection, adjustment, lubrication, tyre inflation.
Or adjustment, repair, replacement of:

  • tyres, tubes, wheels and related components;
  • braking system components;
  • transmission system components;
  • any other essential components which prevent safe use of the bike e.g. deteriorated grips or saddle, failed bottom bracket, failed headset bearings;
  • components for permanently fitted dynamo-powered lighting systems.

However, you are not allowed to use the voucher for the following:

  • replacement or upgrade of existing safe and roadworthy components;
  • replacement or repair of removable or battery-powered lighting systems;
  • provision of any additional parts or accessories, whether attached to the bike or for the rider’s use;
  • replacement of any part or component, even if the replacement is necessary and otherwise eligible, by a component of disproportionate value where a component of quality and value more closely matching the original is reasonably available. In other words, it is not permitted for new parts to represent very significant upgrading not essential for roadworthiness.

When registering to get the Fix your bike voucher, you must provide your details about your bike. This includes the type of bike you have. for example, a commuter bike or town bike or racing bike or folding bike or electric bike or adaptive bike etc.

You must also specify the brand of your bike. For example, it is a Cannondale or Specialized etc and the main colour of your bike.

Registered bike repairs shop or mechanics

Only use the bike repair voucher with the bike repairs shops or bike mechanics registered with the Fix your bike voucher scheme. You can find the registered bike repairs shops and mechanics here.

Note down your bike repair voucher code, you will need this when you take your bike to the shop for repairs.

Also, bring documents for proof of your identity and your address. For example, your passport or driving licence for proof of identity. Utility bills such as water or electricity or council tax bill for proof of address.

Companies House filings

If you run your business using a limited company, remember to deliver your company accounts and confirmation statement to Companies House on time to avoid a late filing penalty.

If you require any help with your company filings, feel free to contact our accountants, they will be more than happy to assist you.

Monthly exchange rates 2021 by HMRC

You may use the monthly exchange rates published by Her Majesty Revenue and Customs (HMRC) to translate your foreign currency transactions into Pound Sterling (GBP) for your VAT, corporation tax and company accounts.

2020 and 2021 exchange rates

2020 HMRC monthly exchange rates2021 HMRC monthly exchange rates
January 2020January 2021
February 2020February 2021
March 2020March 2021
April 2020
May 2020
June 2020
July 2020
August 2020
September 2020
October 2020
November 2020
December 2020
Source: HMRC

Translate foreign currency transaction into GBP for VAT

Say you bought an equipment from Malaysia for Ringgit Malaysia 55,000 on 31 December 2020. You settled the invoice on 8 January 2021. The exchange rate on 31 December 2020 from Ringgit Malaysia to Pound Sterling was 5.4369 and the rate on 8 January 2021 was 5.4683.

For accounting purposes, to record the purchase of the equipment based on the invoice received on 31 December 2020 are as follows:

DebitCredit
Equipment£10,116.06
Trade Creditor£10,116.06
Purchase of equipment from Malaysia (MYR55,000 @ ex rate 5.4369)

Double entries based on the payment to settle the invoice for the purchase of the equipment on 8 January 2021 are as follows:

DebitCredit
Trade Creditor£10,116.06
Bank£10,057.97
Gain on foreign currency£58.09
Payment made to Trade creditor in Malaysia re: equipment (MYR55,000 ex rate @5.4683)

If you are reporting your VAT using the cash accounting scheme then you would report £10,057.97 in your VAT return. Otherwise, you report £10,116.06 under the standard VAT scheme which is based on accruals basis.

Foreign currency transactions in your company accounts

Besides, translating and reporting your VAT transactions to HMRC correctly, when comes to preparing your company accounts for Companies House, you must also include an accounting policy note in your company accounts relating to foreign currency transactions. This is required under the Financial Reporting Standard (FRS) 102.

an example of an accounting policy on foreign currency transactions can be as follows:

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate at the date of transaction. Exchange rate differences are taken into account in arriving at the operating result.

Another important document you must submit to Companies House is the Confirmation Statement.

123254
%d bloggers like this: