Update for small businesses:
The Government has recently announced some big news for any business that is importing or exporting - the UK Global Tariff (UKGT), the UK’s new, Most Favoured Nation (MFN) tariff regime.
This is something that is going to massively change the operations of any business that is importing or exporting overseas.
As a heads up, here are the details in a nutshell – whilst the information has been extracted from Government sources, you will want to look at this from the lens of your own business and its needs:
What will it do?
The new tariff is tailored to the needs of the UK economy. It will support the economy by making it easier and cheaper for businesses to import goods from overseas. It is a simpler, easier to use and lower tariff regime than the EU CET and will be in pound sterling, not euros. It will scrap red tape and other unnecessary barriers to trade, reduce cost pressures and increase choice for consumers and back UK industries to compete on the global stage.
How will it work?
Nearly 6,000 tariff lines will be streamlined and simplified with lower costs for businesses by reducing administrative burdens. The changes include scrapping unnecessary tariff variations, rounding tariffs down to standardised percentages and getting rid of those below 2% - also getting rid of the EU’s complex Meursing table, allowing to scrap thousands of unnecessary tariff variations on products - including over 13,000 tariff variations on food products. Almost all pharmaceuticals and most medical devices are tariff free in the UKGT. However, some products used to fight COVID-19 maintain a tariff. To ensure those working on the frontline can access vital equipment easily, the UK has introduced a temporary zero tariff rate on these products. This relief waives the tariff and VAT for Personal Protective Equipment, medical devices, disinfectant and medical supplies from non-EU countries.
What are the benefits?
UKGT ensures that 60% of trade will come into the UK tariff free on World Trade Organisation terms or through existing preferential access and successful free trade agreement negotiations will increase this. This will lower costs for businesses, ensuring they can compete on fair terms with the rest of the world, as well as keeping prices down and increasing choice for consumers.
UK consumers will also benefit from more choice and lower costs on numerous goods thanks to zero tariffs. To promote a sustainable economy tariffs will be cut on over 100 products to back renewable energy, energy efficiency, carbon capture and the circular economy with many dropping to zero tariffs. The Government is committed to continuing to waive the tariffs on key COVID-19 items should this be necessary upon implementation of the UKGT.
What remains unchanged? The Government is maintaining tariffs on products backing UK industries such as agriculture, automotive and fishing. This will help to support businesses in every region and nation of the UK to thrive. Some tariffs are also being maintained to support imports from the world’s poorest countries that benefit from preferential access to the UK market.
When will this be? The UKGT will replace the EU’s Common External Tariff (EU CET) on 1st January 2021 at the end of the Transition Period.
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