Landed cost of importing from the UK — how to calculate the total cost (duty, VAT, freight, agent)

What is landed cost when importing from the UK

Landed cost (literally "the cost on landing", in practice: the cost to your door) is the total amount you actually spend to bring goods from a supplier in the United Kingdom all the way to your warehouse or customer in Poland. It is a broader concept than the purchase price — it includes every fee, tax and service that accumulates along the way. After Brexit, UK–EU trade is trade with a third country, so every commercial shipment is subject to customs clearance, duty (unless a preference applies) and import VAT. It is precisely these items that cause the "shop price" in the UK and the "shelf cost" in Poland to differ so significantly.

A full landed cost typically comprises the following elements:

Purchase price — the amount on the supplier's commercial invoice (transaction value).
Freight — transport from the UK to Poland (road, sea, air), including fuel surcharges and ferry fees.
Insurance — the cost of a cargo policy for the duration of transit, if taken out.
Customs duty — charged on the customs value at the rate assigned to the goods' HS code (or 0% where the TCA preference applies).
Import VAT — charged on a base that includes the customs value, duty and excise.
Excise duty — where applicable (e.g. alcohol, tobacco products, certain fuels).
Customs agent, terminal and storage fees — the cost of the customs declaration, terminal handling charges (THC), demurrage/storage, and any inspection fees.

The sum of these items is the landed cost. Only this figure allows you to calculate your true margin and set a selling price. An importer who calculates only the purchase price and freight omits taxes and border charges — which are often the largest "invisible" part of the bill.

Why the invoice price alone is not enough

The price on the supplier's invoice tells you only how much you are paying for the goods themselves. It does not include the cost of crossing the border or the tax burden in Poland. On imports from the UK these charges can be significant: Polish import VAT is calculated on a base that already includes duty and freight, so it grows with every additional item. If you are planning to resell, only landed cost gives you an honest starting point for pricing — comparing the UK purchase price directly against the Polish selling price creates an illusory margin that disappears at clearance.

Components step by step and the order of calculation

The order of calculation matters, because individual items build on one another: duty is calculated on the customs value, and import VAT is calculated on a base that already includes duty. Getting the order wrong (e.g. calculating VAT on the goods price alone) understates the liability and leads to errors in the customs declaration. Below are the three basic steps for calculating border charges, followed by items that are added outside those charges. This article reflects the legal position as at 2026-06-02. Please consult a customs agent before taking action.

Step 1 — customs value

The starting point is the customs value. In the vast majority of cases it is established using the transaction value method — based on the price actually paid or payable for the goods (the invoice price). Depending on the delivery terms (Incoterms), the cost of freight and insurance incurred up to the point where the goods enter the EU customs territory (to the EU border) is added to that price. HMRC describes the transaction value method as the primary method — applied to the great majority of imported goods. In practice: if freight to the EU border is not yet included in the goods price (depending on the Incoterms), it must be added to the customs value. The valuation methodology is described on gov.uk in the guidance "Working out the customs value of your imported goods".

Step 2 — customs duty

Duty is calculated as customs value × the duty rate assigned to the HS code (commodity code) of the product. The rate is not universal — it depends on the specific classification of the goods and may be 0%, a few percent, or more. You can check the rate for a specific code in the Trade Tariff. If the goods satisfy the preferential rules of origin under the EU–UK Trade and Cooperation Agreement (TCA) and you hold valid proof of origin, duty may be 0%. Without such proof the preference does not apply and duty is charged at the conventional tariff rate. Note: the origin of the goods is not the same as the country of dispatch — goods shipped from the UK but manufactured in a third country may not qualify for the preference.

Step 3 — import VAT

Import VAT is calculated last, on a base that already includes the preceding items: VAT = (customs value + duty + excise, if applicable) × the VAT rate. This is the critical point — VAT is calculated on an amount that includes duty, not on the goods price alone. In Poland the standard VAT rate is 23%; reduced rates apply to certain categories of goods. For an importer registered as a VAT taxable person, import VAT is usually neutral (it can be deducted or accounted for on the VAT return), but it affects cash flow and landed cost in cash terms. On the UK side, the analogous mechanism for limiting cash-flow burden is Postponed VAT Accounting — it allows import VAT to be accounted for on the VAT return rather than paid upfront at clearance.

Items added outside the border charges

After the three steps above, landed cost takes in logistical and service costs that do not enter the tax base but genuinely burden the import budget:

Customs agent fee — for preparing and submitting the customs declaration (import, and possibly T1/T2 transit).
Terminal / port charges (THC) — container or trailer handling, manipulation fees.
Storage / demurrage — if goods await clearance or collection beyond the free time allowed.
Inspections and examinations — e.g. phytosanitary, veterinary or other checks required for the category of goods.
Last-mile delivery — transport from the terminal to the consignee's warehouse.

Only the sum of the border charges (steps 1–3) and these items gives the full landed cost.

Worked numerical example (illustrative)

The following example is illustrative only — it demonstrates the mechanics of the calculation, not actual rates for a specific product. The duty rate depends on the HS code and origin, so we use the variable "R%" rather than a single "real" figure. Assume a batch of goods purchased in the UK and brought to Poland:

Purchase price (supplier's invoice): £10,000 (equivalent).
Freight to the EU border: £1,200.
Cargo insurance: £100.
Duty rate for HS code: R% (to be checked in the tariff — may be 0% under TCA with proof of origin).
VAT rate: 23% (standard rate assumed for illustration).
Agent fee + terminal: £600.

Calculations in order:

Customs value = 10,000 + 1,200 + 100 = £11,300.
Duty = £11,300 × R%. With 0% preference (TCA + proof of origin) duty = £0. At the conventional rate duty = £11,300 × R%.
Import VAT = (11,300 + duty) × 23%. If duty = £0, VAT = £11,300 × 23% = £2,599. If duty > £0, the VAT base increases by the duty amount.
Landed cost = customs value + duty + import VAT + agent/terminal fees = £11,300 + duty + VAT + £600.

Two things are visible here: first, duty "cascades" into the VAT base, so every pound of duty also raises VAT; second, holding proof of origin (zeroing duty) genuinely reduces landed cost. For a VAT-registered business part of the VAT is recoverable, but in cash terms it still has to be financed. How much duty will actually be owed depends on the HS code — which is why correct classification is so important.

The role of Incoterms in landed cost

Incoterms 2020 rules determine which costs are already included in the seller's price, which the buyer pays separately, and who is responsible for transport, insurance and clearance. They therefore have a direct bearing both on what enters the customs value and on what items you need to add separately to landed cost.

EXW (Ex Works) — the seller makes the goods available at their premises; the buyer bears almost everything: freight, insurance, UK export clearance and EU import clearance. The price is "bare", so landed cost requires the largest number of additions.
FCA (Free Carrier) — the seller delivers the goods to a carrier nominated by the buyer and is responsible for export clearance; the remainder (main freight, insurance, import) is borne by the buyer.
CIF (Cost, Insurance and Freight) — used in sea transport; the seller pays freight and insurance to the port of destination. Part of the freight cost is already in the price, which affects how much is added to the customs value.
DDP (Delivered Duty Paid) — the seller delivers the goods cleared to the named place, bearing duty and (usually) other charges. DDP is the simplest landed cost for the buyer, but the costs are embedded in a higher goods price.

The practical takeaway: before calculating landed cost, establish the Incoterm for the transaction. Otherwise you risk double-counting (e.g. freight already included under CIF) or omitting an item that under EXW you must bear yourself. We cover the rules and the DDP variant in a dedicated article on Incoterms 2020 in UK trade.

The most common mistakes when calculating landed cost

Most overestimated margins and border surprises stem from a handful of recurring mistakes:

Omitting agent, terminal and storage fees — these items do not appear on the supplier's invoice, so they are easy to forget. They can add several hundred pounds to every shipment.
Incorrect HS code classification — a wrong code means the wrong duty rate (too high or too low), and consequently an incorrect VAT calculation. Correct HS/CN code classification is the foundation of the entire calculation.
Confusing duty with VAT — these are two different charges with different bases and different characters. Duty is a final cost; VAT for a registered taxable person is usually recoverable. The differences are explained in the article on duty vs VAT.
No proof of origin → loss of 0% — many importers assume that "because the goods come from the UK, there is no duty". Without valid proof of origin the TCA preference does not apply and duty is charged at the tariff rate.
Calculating VAT on the goods price alone — import VAT is calculated on a base that includes the customs value and duty. Omitting duty from the VAT base understates the liability.

How to reduce landed cost

Landed cost can genuinely be reduced without breaching the rules:

Obtain proof of origin — if the goods qualify for TCA preference, correct documentation zeros the duty.
Verify the HS code — correct classification guards against overstated duty; check the rate in the UK duty calculator and learn the formula for calculating duty.
Choose the right Incoterm — a conscious choice of delivery terms avoids double costs and gives you better control over transport.
Calculate everything upfront — use a clearance cost calculator to estimate landed cost before buying, not after the fact.

What the current official rules tell us

From the perspective of the official rules, landed cost on imports from the UK rests on three pillars: (1) the customs value established using the transaction value method, increased by freight and insurance to the EU border in accordance with the Incoterms; (2) duty calculated as customs value × the rate for the HS code, with a possible 0% rate where the preferential rules of origin under the TCA are satisfied and proof of origin is held; (3) import VAT calculated on a base that includes the customs value, duty and any excise. Duty rates are not universal — they depend on the classification of the goods and must be checked in the Trade Tariff on each occasion. To the border charges must be added the costs of the agent, terminal and storage, which do not enter the tax base but genuinely burden the import. This article reflects the legal position as at 2026-06-02. Please consult a customs agent before taking action.

FAQ — frequently asked questions

What is landed cost when importing from the UK?

Landed cost is the total cost of bringing goods from the United Kingdom all the way to the recipient's door in Poland. It comprises the purchase price, freight, insurance, customs duty, import VAT, any applicable excise duty, and the fees of the customs agent, terminal and storage. It is the true cost of the purchase — not merely the price on the supplier's invoice.

In what order are customs duty and import VAT calculated?

First, the customs value is established (usually the transaction value from the invoice, plus freight and insurance to the EU border per the Incoterms). Then duty = customs value × the tariff rate for the relevant HS code. Finally, import VAT = (customs value + duty + any excise) × the VAT rate. VAT is always calculated on a base that already includes duty.

Does the TCA agreement mean duty on UK goods is 0%?

The EU–UK Trade and Cooperation Agreement (TCA) allows a 0% duty rate only for goods that satisfy the preferential rules of origin and are supported by proof of origin. Without proof of origin the preference is lost and duty is charged at the conventional tariff rate. The mere fact of shipment from the UK is not enough — what matters is the origin of the goods, not the country of dispatch.

How do Incoterms affect landed cost?

Incoterms (e.g. EXW, FCA, CIF, DDP) determine which costs are already included in the seller's price and which the buyer pays separately, as well as who is responsible for clearance. Under EXW the buyer bears almost everything (freight, insurance, clearance); under DDP the seller delivers the goods cleared to the door. Incoterms also affect how much of the freight cost enters the customs value.

What are the most common mistakes when calculating landed cost?

The most common mistakes are: omitting customs agent, terminal and storage fees; incorrect HS code classification that overstates or understates duty; confusing duty with import VAT; and lacking proof of origin, which results in losing the TCA 0% preference. It is also frequently overlooked that VAT is calculated on a base that already includes duty.

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Landed cost of importing from the UK — how to calculate the total cost of bringing goods