Guidance

Delivery costs to include in the customs value

Find out about the different types of delivery costs, and which ones you must include or exclude in the customs value if you’re an importer or clearing agent.

Valuing goods can be complicated, so if you’re not an importer or clearing agent you may want to get someone to deal with customs for you.

Before you work out which delivery costs to include in the customs value you must first have read Prepare to work out the customs value of your imported goods.

The following are classed as delivery costs:

  • the cost of transport
  • the cost of insurance, including global or blanket policies
  • loading and handling charges
  • container charges, for example when hired for transportation of the imported goods
  • terminal charges, charges for a variety of services in connection with the handling and storage of freight containers at container depots
  • any other charges involved in carrying the goods from one place to another

You only need to include the costs up to the place of introduction of the imported goods into the UK border.

You must also include all inland transport and associated costs in the country of export in the customs value.

How to determine the place of introduction

The place of introduction for goods:

  • travelling by sea, is the port of importation into the UK when the goods are delivered direct to the UK
  • travelling by air, is the point where the UK border is first crossed during the air journey
  • travelling by road, rail or inland waterway, is the point where the goods first pass a customs office, this is usually the point when the goods cross the UK border
  • sent by post, is the address for delivery, for example, your office or home

Adjustment factors that must be included

The following adjustment factors must be included in the customs value:

  • the currency adjustment factor
  • the bunker adjustment factor – this surcharge is raised by shipping lines to take account of fluctuations in the price of marine fuel, a similar ‘fuel surcharge’ is applied where goods are transported by air to compensate for fluctuations in the price of aviation fuel

Transport surcharges that you must include

The following surcharges are part of the cost of transporting the goods to the place of introduction in the UK and must be included in the customs value:

  • peak season surcharge
  • security surcharge
  • war risk surcharge
  • UK port congestion charge

In addition any other payment or surcharge charged by the shipping line, airline or carrier of the goods, which does not relate to a cost incurred, or an activity or operation taking place after the arrival of the goods at the place of introduction must be included in the customs value of the goods.

Where the surcharge is made in connection with transport by air, it may be included in the total air transport costs declared for apportionment purposes.

UK transport costs that can be deducted

Transport costs included in the total freight charge

You can deduct UK transport costs when they are included in the total freight charge if they are charged separately and can be distinguished.

The freight charge can be apportioned to establish the value for the journey after the UK border.

For goods transported by sea the freight charge that would have been paid to the place of introduction is to be included in the customs value.

HMRC will accept the rates shown in rate books or those advertised by the shipping line or other carrier.

For goods transported by rail or road the freight charge is to be apportioned using reasonable means, for example by distance covered outside and inside the UK.

Air transport costs

You only apportion the air transport costs, not the cost of:

  • the air waybill
  • other ancillary charges

Air transport costs includes any surcharges clearly related to the transport of the goods (as opposed to those applied to loading and handling charges at the airport of departure).

Find a list of percentages of air transport costs to be included in the customs value.

Locally agreed rates for UK transport costs for VAT purposes must not be used for ad valorem Customs Duty calculations.

Transport costs included in the price you pay for the goods

You can deduct the UK transport costs for these charges from the price you pay, provided they can be distinguished and evidence can be produced to support them.

The following would be acceptable as evidence:

  • the amount shown separately on the seller’s invoice
  • a certified statement or telex from the supplier
  • an invoice or certified statement of the actual freight amount charged by the carrier to the buyer, seller or agent
  • an invoice or certified statement establishing the total cost of transport, split to show the proportion of actual distance inside and outside the UK
  • a statement from the buyer referring to a schedule of freight rates normally applied for the same mode of transport
  • in the case of goods imported by air, a statement on the invoice confirming that the cost of freight included in the price is the same as that stated on the air waybill

Read the section on examples of how to apportion different transport costs for further information on:

  • transport costs included in the total freight charge
  • transport costs included in the price you pay for the goods

Which UK transport costs must be included

If the transport is free or you provide your own transport you must include in the customs value the amount for transport costs to the UK border.

You can calculate this amount by using the freight rates tariff for the type of transport used, for example:

  • IATA (International Air Transport Association) rates for air transport costs
  • conference rates for sea

Examples of how to apportion different transport costs

Goods invoiced on pre-CIF (cost, insurance and freight) UK border terms

Goods purchased on FOB (free on board) terms

(a) Freight from Japan to Tilbury separately charged — £1,000.

Goods imported at Tilbury.

Place of introduction Tilbury.

The charge for transport is to the place of introduction.

No deduction for transport in the UK is needed. Therefore, the amount to be included in the customs value for transport costs is £1,000.

(b) Freight from Norway to buyer’s warehouse in Glasgow separately charged — £200.

Goods imported at Leith.

Place of introduction Leith.

The place of introduction is Leith but the charge for freight is to the buyer’s warehouse in Glasgow.

The journey from Leith to Glasgow is in the UK.

The cost of the journey from Norway to Leith is shown in the shipping line’s rate book as £180.

Therefore only £180 is to be included in the customs value.

Goods purchased on ex-works terms

Freight from seller’s factory to New York is separately charged — £50.

Freight from New York to Canterbury is separately charged — £600.

Goods imported at Canterbury.

Place of introduction Dover where the goods were transhipped.

The place of introduction is Dover.

But the charge for freight is to Canterbury.

The journey from Dover to Canterbury is in the UK.

The cost of the journey from New York to Dover is shown in the shipping line’s rate book as £550.

The whole of the freight charge from the seller’s factory to New York is to be included in the customs value.

Total freight addition = £550 plus £50 equals £600.

Goods purchased on delivered airport of departure terms

Air transport costs from New York to Heathrow Airport separately itemised — £300.

Total air waybill charges (inclusive of charges for loading and handling at airport of departure) — £350.

Goods imported at Heathrow Airport.

Place of introduction is the notional point where the aircraft crosses the UK border.

The place of introduction is the UK border but the charge for freight is to Heathrow Airport.

The journey from the UK border to Heathrow Airport is in the UK. Therefore, the cost of that part of the journey is to be deducted from the total charge for the air transport costs.

Total air transport costs — £300.

Percentage of journey outside UK — 70% (read the section on air transport costs for further information).

Therefore 70% of the air transport costs are to be included in the customs value: 70% × £300 = £210 + The difference between the air waybill charges and the air transport costs. These are made up of costs incurred in the country of export, such as loading, handling and clearing charges. The total cost must be included in the customs value.

£350 - £300 = £50

Total charge to be included in the customs value equals £210 + £50 = £260

Goods purchased on FOB aircraft terms

Air transport costs from New York to Glasgow Airport separately charged — £400.

Air transport costs from Glasgow Airport to Heathrow Airport separately charged — £100.

Goods imported at Heathrow Airport.

Place of introduction is the notional point where the aircraft from New York to Glasgow crosses the UK border.

The place of introduction is the UK border. The air transport costs from Glasgow Airport to Heathrow Airport are not to be included in the customs value because that journey is in the UK.

Also, the journey from the UK border to Glasgow Airport is in the UK. Therefore the cost of that part of the journey is to be deducted from the total charge for the air transport costs (from the £400).

Total air transport costs from New York to Glasgow — £400

Percentage of journey outside the UK — 70%

Read the section on air transport costs for details of the percentage which must be included in the customs value.

Therefore 70% of the air transport costs from New York to Glasgow are to be included in the Customs value:

70% × £400 = £280.

Goods purchased on FOB Hong Kong terms

Goods shipped by sea to Singapore and then by air to Heathrow Airport.

The charge for sea freight from Hong Kong to Singapore is £500.

The charge for air freight from Singapore to Heathrow Airport is £1,000.

Goods imported at Heathrow Airport.

Place of introduction is the notional point where the aircraft crosses the UK border.

The sea journey is outside the UK, so the sea freight charge of £500 is includible in the customs value.

The journey from the UK border to Heathrow Airport is in the UK. Therefore, the cost of that part of the journey is to be deducted from the total charge for air freight.

Total air freight charge — £1,000

Percentage of journey outside UK — 70% (read the section on air transport costs for all airports to London).

Therefore 70% of the air freight is to be included in the customs value:

70% × £1,000 = £700.

Total charge to be included in the customs value equals £500 + £700 = £1,200

Goods purchased on FOB Tokyo terms

Goods shipped by sea from Tokyo to Seattle and then by air from Seattle to Heathrow Airport.

The total freight charge from Tokyo to Heathrow Airport is £2,000. No breakdown of the charges for the sea and air journeys is available.

Goods imported at Heathrow Airport.

Place of importation is the notional point where the aircraft crosses the UK border.

The place of introduction is the UK border but the charge for freight is to Heathrow Airport.

The journey from the UK border to Heathrow Airport is in the UK. Therefore the cost of that part of the journey is to be deducted from the total freight charge.

As no breakdown of this charge is available, for practical convenience the air transport cost apportionment may be used.

Percentage of journey outside UK — 83%.

Therefore 83% of the total freight charge is to be included in the customs value, 83% × £2,000 = £1,660.

Goods invoiced on post-CIF UK border terms

Goods purchased on CIF Birmingham terms

Goods imported at Avonmouth.

Place of introduction Avonmouth.

The invoiced amount includes transport to Birmingham, which is beyond the place of introduction but is not separately charged.

The seller states that the amount included in the invoice price for the transport from Avonmouth to Birmingham is £50.

Therefore, the amount to be deducted from the invoice price for post-introduction transport cost is £50.

Goods purchased on uniform free delivered domicile terms

Goods imported at Dover.

Place of introduction Dover.

Evidence is provided to show that the free-frontier price would be lower than the uniform free domicile price.

The invoiced amount includes transport to the buyer’s premises in Manchester, Glasgow and Middlesbrough.

The seller states that the average amount included in the invoice price for transport in the UK to the buyer’s premises is £9 per metric tonne.

Therefore, the amount to be deducted from the invoice price for post-introduction transport costs is £9 per metric tonne.

Goods purchased on delivered Horsham terms

Goods imported at Brighton.

Place of introduction Newhaven (that is, the UK border).

The invoiced amount includes transport to Horsham which is beyond the place of introduction but is not separately charged.

There is no statement from the seller of the amount included in the invoice price of the transport from Newhaven to Horsham.

But there is a statement from the haulier of the price charged for the transport to the seller.

This evidence can be accepted without confirmation from the seller that this charge has been costed into the price to the buyer.

Goods purchased on CIF Heathrow Airport terms

Goods imported at Heathrow.

Place of introduction is the notional point where the aircraft crosses the UK border.

The invoiced amount includes air transport costs to Heathrow, which is beyond the place of introduction but is not separately charged.

There is no statement from the seller of the amount included in the invoice price for the air transport costs to Heathrow.

A copy of the air waybill is produced as evidence of the amount charged for the air transport.

This evidence will be accepted by us providing it can be confirmed that the charge shown on the air waybill is the amount costed into the CIF price by the seller of the goods.

The percentages of air transport costs can then be applied in the normal way.

Where no confirmation can be obtained from the seller, no deduction can be allowed and the air transport percentages do not apply.

Which insurance costs must be included and can be excluded

You must include in the customs value the cost of insurance against loss or damage for the goods in transit, up to the place of introduction into the customs territory of the UK.

If you pay a premium which covers the whole journey, the cost of insurance after the UK border does not have to be included in the customs value provided you separately distinguish this element.

Where there is separate cover for the journey after the UK border, the cost of this separate insurance cover does not have to be included in the customs value.

If your insurance covers more than one importation, or relates to other items as well as the imported goods, the cost of that insurance must be apportioned and the appropriate amount included in the customs value.

The following is an example of how to apportion a periodic insurance premium to individual consignments.

Annual set premium — £350

Total value of imports in the previous 12 months — £1,750,000

The premium can be expressed as a percentage of the total value of imports.

350 ÷ 1.750,000 × 100 = 0.02%

This percentage can be used to calculate the insurance costs for individual imports made during the following 12 months.

Where the total value of imports includes, for example, insured or non-insured goods or both dutiable and non-dutiable imports, the percentage can be adjusted if the relevant information is available.

Other costs that can be excluded

Container terminal costs

You can exclude these costs from the customs value if they’re separately charged and are for a container terminal in the UK.

Demurrage costs

You can exclude these costs if the charge is made as a result of delay after arrival of the goods at the place of introduction.

Charges for delay before arrival of the goods at the place of introduction are to be included in the customs value.

Surface freight costs

You cannot normally use surface freight costs when goods are sent by air.

Treatments 1 or 2 will apply where the contractual arrangements between the buyer and seller:

(a) are in force at the time of entry of the goods concerned to free circulation

(b) require the seller to have the goods transported by air to ensure agreed delivery deadlines are met

(c) the seller has to bear the additional costs.

Treatment 1

If the terms of the original order were CIF or post-CIF, then the terms change to carriage and insurance paid to (CIP) and the air transport cost is considered to be included in the CIP price.

No further addition for transport and associated costs is required.

Treatment 2

If the terms of the original order were FOB, those terms change to CIP or carriage paid to (CPT).

The CIP or CPT price is considered to include the air transport cost.

No further addition for transport and associated costs is required unless any further costs are incurred by the buyer, for example, for insurance or if the buyer makes a contribution towards the additional air transport costs (for example by paying an amount equal to what it would have cost to transport the goods by sea). In which case those costs have to be included in the customs value.

In either case, the cost of transport in the UK can be excluded from the customs value, provided the costs are shown separately on the invoice, or can be evidenced by alternative satisfactory means.

Contact the imports and exports general enquiries helpline for further information if consignments are regularly shipped late.

Updates to this page

Published 3 November 2022

Sign up for emails or print this page