Alexandra Stuart, 24, a student in London (pictured above), had saved up to buy an already slightly-too-expensive pair of trousers from a small fashion boutique in Barcelona. She assumed that all she’d have to pay to receive them was the advertised 8-euro shipping charge flagged at checkout. She was surprised, therefore, to receive an email the day after she’d clicked ‘Buy’ from DHL, asking her for another £35 in customs duty before it could deliver the now-even-more-spendy parcel.
She is far from alone. Twitter is filling up with complaints about the fact that since Brexit, shopping from our favourite European websites for everything from Spanish knitwear to Scandinavian rugs to French organic wine has just got a lot more confusing, and offputtingly costly.
EU retailers must now pay UK VAT on goods sold to UK shoppers, a fee that may or may not be added to your basket at checkout depending on how much your order amounts to, and whether the business you are buying from is aware of the new rules.
Before Brexit, there were no import fees on goods moved between the UK and the EU, but now you may have to pay customs duty when your parcel arrives in this country, too. Some delivery services, like Royal Mail, DHL and DPD, are also adding on admin fees to compensate them for the hassle of navigating all this paperwork.
It is not always clear before you buy how much this will all add up to. When Alexandra complained to the Barcelona boutique and to DHL, the fee was waived, but she still does not know why, and says it has put her off ordering from Europe again.
Small businesses are facing similar dilemmas. Kimberley Bolton, director of Travfurler Link opens in a new window, which sells travel accessories for pets such as beach drying coats for dogs, says her company is British but she also sells to EU customers. “We are seeing delays on order deliveries as well as customs charges that were not an issue previously. It is making it hard for small businesses like us to be able to source products from outside the UK that are as cost-effective.”
James Wilson, managing director of healthy fast-food chain Kauai UK Link opens in a new window, agrees. His nut supplier from Ireland is now rejecting orders because the new taxes mean it costs them 18 euros to ship, rather than the previous 5 euros, which they were happy to absorb.
Small businesses are having to rethink their supply chains, as they are being hit with sizeable costs. “The prices we are paying are 20 per cent or more more expensive, and there’s less available” says James.
It is a confusing area, but one thing is clear: shopping online has just got more complicated.
Here’s all you need to know before clicking ‘Buy’.
How can you know whether what you’ve ordered is coming from the EU?
It is not always easy to tell if the site you are shopping on is shipping goods from the EU. Many European brands have bought and operate under .co.uk and .com domains. Even some seemingly British brands may be based overseas. Brooks England, for example, which produces leather bike saddles in the West Midlands, has suspended delivery within the UK while it “analyses the situation and plans the proper administrative steps” because many saddles are shipped, after manufacture, to its logistics centre in the EU before being sent to customers. If you are in any doubt, check the small print on the website where you are shopping and contact them if it’s still not obvious.
Many bigger European brands may have UK stores offering click and collect, which could help you avoid fees.
How can people work out what the true cost of items coming from the EU now are?
UK VAT is charged at 20 per cent. On top of VAT, you may also be charged custom duties, which vary from 0 per cent to 25 per cent of your order, depending on what you’re buying. Unfortunately, it can be challenging to find out in advance how much you will pay. You can try and get some idea of what might be due here on the government website Link opens in a new window.
Antonio Marsocci, of Think Positive Fashion Café Link opens in a new window, an online food and interiors shop, says shoppers first need to ascertain if the retailer ships “DDP, i.e. delivery and duty paid”.
“This means that the retailer will deal with customs and local VAT payment for you [the cost is bundled up with what you are buying] and you will have the goods delivered to your door as usual.”
Some big retailers and online marketplaces such as Amazon and Zalando have confirmed they will include all VAT and custom duties at the point you buy, meaning your order is a little more expensive but there will be no hidden fees, but, as many shoppers are finding, this is far from universally the case.
“If the retailer doesn't ship DDP the consumer will have to take into consideration that they will receive an extra bill from for local VAT payment and one from the shipping company for relevant paperwork”, adds Antonio. “Another thing to consider is time. In both cases goods will take longer to reach their destination due to customs paperwork.”
If you are buying something under £135 the VAT should be charged at the point you pay, and clearly shown in the total at checkout. But as consumer group Which? points out, “Unless your receipt shows that you’ve correctly paid VAT at purchase, you might find you’re being chased for it upon delivery.”
If what you are ordering totals more than £135 then VAT will be charged at delivery, and you can expect to be contacted by the delivery service who will pass on what you pay to HMRC.
What do shops have to tell you?
At the moment, there is no consistency about how or what a retailer states on its site about shipping and taxes, so you may need to hunt around for information. “Shoppers should ensure they check the small print when shopping on international websites to avoid any nasty surprises”, says Tjeerd Brenninkmeijer of Bloomreach Link opens in a new window, an ecommerce experience specialist.
“Retailers would benefit from providing clear information about the additional costs to consumers to avoid any disappointment or unwanted extra costs. But that is easier said than done, as retailers are still working through the new regulations that are defining the unique relationship between the UK and the EU.”
Many retailers state in their delivery FAQs whether or not they include VAT and customer charges to UK customers. If in doubt, check, and email or call the shop in question.
Are there any other fees to pay?
Watch out for processing or admin charges. Some delivery and logistics companies are levying fees for the extra hassle of dealing with all this new red tape.
Royal Mail now has a flat fee of £8 for handling goods shipped from the EU.
DHL Express charges a minimum of £11 or 2.5 per cent of the total duty.
DPD charges £5 plus VAT.
TNT charges 5 per cent of the combined duty and VAT charge or £20, whichever is greater.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.
How does all this impact ‘free returns’?
You may no longer be able to automatically return your online shopping, free, if it doesn’t fit or you don’t like what you’ve ordered.
You now need to complete a customs declaration form to send back your shopping to an EU retailer, and the customs charge will need to be paid by the company that you are returning goods to, who may pass it back to you. You may also not find it easy to get any refund on VAT or import charges you’ve already paid.
Adam French, Which? consumer rights expert, says, “This is the unfortunate reality of buying from EU-based retailers under the terms of the new trade deal. It’s vital the government makes it clear to consumers as well as traders what the changes as a result of the new EU-UK trade deal mean for them and how they shop.”