On 31 January 2020, the United Kingdom left the European Union. and the transition period began. This transition period will last until 31 December 2020, meaning that all EU laws and rules will continue to apply for the UK up to and including that date. The laws and rules will change as of 1 January 2021. From that date onwards, there will be a ‘new relationship’ between the EU and the UK. If you send parcels to the UK, read this blog to find out about the changes that will affect you.
Sending parcels the UK from 1 January 2021 onwards.
As of 1 January 2021, there will no longer be free movement of goods and services between the United Kingdom and European Union countries. From then on, new rules will apply depending on the agreements made and still to be made. For sending parcels to the United Kingdom, there are a number of definite changes as a result of Brexit. We have summarised those changes for you below:
• Specifications for World shipments.
Due to Brexit, any parcels that you send to the UK through MyParcel will be treated as World shipments as of 1 January 2021. World shipments are subject to different specifications and rules, which we have listed below.
Where the same rules apply within the European Union for whichever products you send, this is different for World shipments. Check here which items you are permitted to send and whether the products you are sending are (still) permitted in the UK in advance. We have drawn up a useful checklist for World shipments. Click here to view them.
• Change to rate and calculation method
For World shipments, the rate will be calculated using a basic rate combined with a kilo surcharge. For the UK, that means the following:
The actual weight (in kg) and the volume weight (in dm3) are used to work out the amount of the kilo surcharge. Whichever of the two is higher determines the amount of the kilo surcharge. A higher tax rate applies for shipments that take up more space and/or weight during transport than for smaller and/or lighter shipments. The example below helps to explain how it works:
Size: 40 x 30 x 60 cm
Content: 4 x 3 x 6 dm = 72 dm3
Actual weight: 3 kg
Volume weight: 72 / 12 = 4,2
The volume weight is calculated based on the content (dm3) / 12. In the calculation example, 4.2 would be used to calculate the kilo surcharge. A weight of 5 kg would be used to calculate the kilo surcharge for this shipment.
• Customs formalities.
If you supply products outside of the European Union, free movement of goods and services will not apply and you have to deal with customs formalities. This means that all shipments to the UK will pass through customs and need to be provided with completed customs forms. In this blog, we give a detailed explanation about how to complete customs forms and how they work.
• Longer transmission time.
Parcels that cross the European Union border will pass through customs and will be subject to customs clearance time. This will extend the transmission time for parcels to the UK as of 1 January 2021.
• Changes for your plug-in and the MyParcel link.
Brexit will affect webshop software settings. You may need to take action yourself so that you can continue shipping parcels to the UK from 2021 onwards without experiencing any problems. In this blog, we explain which action you need to take for each plug-in to prepare your webshop for the new changes.
• 0% VAT rate for World shipments.
As of 1 January 2021, we will apply a 0% VAT rate for World shipments.
Prepare your webshop so you can ship parcels to the UK in 2021.
In order to continue sending parcels to the UK from 1 January 2021 onwards, you need to sort out a few things. We will explain step-by-step what you need to do.
1. Register with the UK tax authorities.
From now on, you will need to pay VAT to the UK tax authorities. This only applies to shipments you send to consumers in the UK with a value lower than £135. In addition to VAT, shipments worth over £135 may be subject to import duties and customs clearance charges. For shipments with a value over £135, the process for paying tax is slightly different. For these parcels, the recipient pays all taxes (VAT and any import duties and customs clearance charges) to our delivery partner in the UK.
NB! If you only sell B2B and your customer has a VAT number, you do not need to register.
2. Request an EORI number from the UK government.
You need this number in order to declare your goods to the UK customs authorities and continue trading with the UK.
NB! If you already have a customs number for shipments outside of the EU, it will not be valid in the UK. You will need request it from the UK government directly.
3. Set up your returns policy.
As of 1 January 2021, the European returns service through MyParcel will not apply to shipments to and from the UK. From then on, returns will also need to be declared to the customs authorities and you will need to pay VAT (depending on the value). Customs clearance costs and handling costs may also be applied for this.
In order to avoid hassle, you can apply for an Article 23 permit for your returns. As part of that, you declare the import on your own VAT return and you do not have to pay VAT per item at customs. That way, your returns will pass through customs quicker. This applies to products with a value of up to € 150. For shipments with a value over €150, we would be happy to look at other options together.
NB! Applying for an Article 23 permit takes eight weeks. There are also other ways to arrange this. Take a look at all of the options first and work out which one suits you best.
4. Share required customs information.
As of 2021, every shipment to the UK must be accompanied by completed customs forms; otherwise, the shipment cannot be processed. The completed customs form provides additional information about the shipment. When you create a UK shipment, the correct customs form will be retrieved automatically. To avoid unnecessary delays, it is important that you complete the customs form as completely and truthfully as possible. You also need to enter an HS code, which is a code used by the UK customs authorities to classify and assess goods. Your code is available here. The customs form is also your shipping label and must be attached to the shipment. It is an official document that guides any future investigations in the event of problems or claims.
5. Change your delivery promise (transmission time) for shipments to the UK.
As of 1 January 2021, shipments to the United Kingdom will have a longer transmission time than you are used to. This is because free movement of goods (and services) will no longer apply between the UK and the WU and parcels will need to pass through customs. On average, shipments to the UK take seven days to arrive. In addition, customs clearance can take one to four weeks. Please factor this in and, if necessary, change your existing delivery promise for shipments to the UK so that your customer is aware of this.
6. Check your software and systems prior to Brexit: perform a check!
Your software and systems need to be set up so that shipments to the UK are processed correctly and everything runs as smoothly and automatically as possible. That is why you need to check the software and systems you use before 1 January 2021. Be sure to check:
- that your plug-in is working properly;
- the MyParcel link;
- the shipping method for shipments to the UK;
- shipping costs for shipments to the UK;
- that the correct VAT settings are configured in your accounting system; etc.
Following the UK’s membership of the EU for many years, the impact of Brexit will be huge. There is still a lot of uncertainty (for us as well) about new processes and working methods post Brexit. For example, it usually takes one to four weeks for parcels to pass through customs. Since we will also need to get used to new processes and working methods, this is expected to take four weeks during the initial period after Brexit takes effect. Manage your customers’ expectations by factoring in situations such as this.
We will do everything we can to deliver your parcels on the other side as efficiently as possible. If you have any questions about step 1, 2 of 3, the Dutch Brexitloket [‘Brexit Information Point’] and Dutch Tax and Customs Authorities will be happy to help. Feel free to contact us with any other questions. We’re here to help.