Import/Customs Duty on Crowdfunded Products
In my earlier article about Kickstarter and VAT, I highlighted the need for anyone running a crowdfunding campaign in or from the UK to be mindful of their exposure to VAT and other taxes.
Turns out buyers need to be thinking about their tax position as well. If goods are being shipped to you from outside the UK, you may find that Customs and Excise apply an “import duty” on your parcel before you are receive it. Imports of the Pebble SmartWatch were affected by this last year and there’s frequent and vibrant discussion over on Money Saving Expert about this as people periodically cry foul over import duties on their Kickstarter-ed goods.
Whilst a gift from someone overseas is not considered taxable, the majority of people running crowdfunding campaigns are reluctant to risk potentially misrepresenting the contents of the parcel as a gift when sending it. Payment gateways, such as PayPal, and Customs and Excise have all done their best to establish the clear rule – pledging to a crowdfunded project in return for a reward is buying and any goods you receive as a consequence are liable for all appropriate taxes.
Shipping and handling are also included in the value of the item when it comes to duties so be wary of just where goods are being shipped from and how this affects the value of your item.