Figures published by HM Treasury show that income collected from customs duty payments levied on goods imported from around the world into the UK has risen by 50% in the last 12 months, say leading tax and advisory firm Blick Rothenberg.
Simon Sutcliffe, a partner at the firm said: Between July 2020 bad June 2021 the total raised from tax duty was £3.4 billion. But from July 2021 to June 2022, it increased to £5.1 billion an increase of £1.7billion or 50 percent which could be used to help struggling households.”
He added “During the competition for the new Prime Minister, there has been discussion as to how any potential tax cuts would be funded. Many analysts have stated that the new Chancellor would have £30 billion of extra funding, from increased taxation, to rely on to fund tax cuts. What don’t we know is whether this extra customs duty revenue is part of this additional pot that tax-cutting leadership contenders are seeking to rely upon?”
Simon Sutcliffe said: “There are two reasons for this growth in customs duty revenue. Firstly, because as customs duty is calculated as a percentage of the value of any imported goods. The rising costs of raw materials and finished goods crossing the UK border, mean that as prices rise so does the amount of customs duty collected.
“Secondly, post-Brexit, HMRC allowed traders to defer their customs declarations, relying upon them to submit a full declaration many months later. This special scheme allowed UK supply chains to keep moving in a time of transition and uncertainty. Now that this special regime has ended, traders are having to submit their customs declarations and correcting errors in the amount of duty they originally declared.”
Simon added: “In any event, although a ‘windfall’ for the UK Treasury, it means rising prices for manufacturers and consumers. Customs duty is usually passed straight-on by way of higher prices for raw materials and finished goods to the end user. This extra revenue may be regarded as a potential way to fund a tax cut for the new government to allow them to influence and incentivise different sectors of the economy. But at its base level it represents another rise in prices for companies and consumers and more inflationary pressure.”
Simon said: “Pre-Brexit much of the customs duty collected by HM Revenue & Customs would have been sent to the EU Commission as part of our EU membership responsibilities. However, this revenue now stays in the UK and goes directly to the Treasury.”