What is customs clearance?
Customs clearance is the official process of declaring goods to HMRC when they cross the UK border, paying any applicable import duty and VAT, and obtaining HMRC’s permission to release those goods into free circulation or export them abroad. Every commercial shipment entering or leaving the UK must go through this process. Without it, your goods cannot leave the port, airport, or freight terminal.
You’ve just been handed a new responsibility at work: customs clearance. Your manager mentioned something about EORI numbers and commodity codes. Your supplier is already asking for instructions. And you have no idea where to start.
That is an extremely common situation. Customs clearance looks complicated from the outside. There are acronyms, government systems, duty calculations, and a long list of documents you’ve never seen before. The anxiety is real because the consequences of getting it wrong are real: goods held at port, unexpected fines, angry clients waiting for their stock.
this article is written for you. It explains the full customs clearance process in plain English, covers both imports and exports, and points you to deeper guides on specific topics. By the end, you will understand what customs clearance is, who does what, what you need to have ready, and how to avoid the most common mistakes.
Customs clearance is the process HMRC uses to control goods moving across the UK border.
When a shipment arrives in the UK from overseas, it does not automatically enter the country. It sits under customs control in a bonded area at the port, airport, or freight depot. A customs declaration must be filed, the goods must be assessed, and any applicable duties and taxes must be accounted for. Only then does HMRC authorise release.
The same principle applies in reverse for exports. Before goods leave the UK, an export declaration must be submitted. HMRC needs to know what is leaving, who is sending it, and where it is going.
Customs clearance exists for several reasons. The UK government collects revenue through import duties and VAT. HMRC enforces trade controls, sanctions, and licensing requirements. Border Force and HMRC protect the country against prohibited goods, undeclared goods, and undervalued shipments. Customs clearance is the mechanism that makes all of this possible.
Getting customs clearance wrong is expensive. It is also surprisingly easy to do when you are new to the process.
The most immediate consequence is a customs hold. If the information on your declaration does not match your documents, or if a required licence is missing, HMRC will stop your goods while the issue is investigated. Every day your goods sit at Felixstowe or Southampton costs money: demurrage charges from the shipping line, storage fees from the terminal, and delay costs if customers are waiting on the stock.
Beyond delays, errors on customs declarations can trigger financial penalties. HMRC can issue a customs civil penalty for inaccurate declarations. In serious cases, goods can be seized. A pattern of errors can attract increased scrutiny on future shipments.
Underpaying duty, even unintentionally, can result in HMRC issuing a demand for the unpaid amount, plus interest and potential surcharges. Overpaying duty is also a problem, because recovering it requires you to file an amendment and can take months.
Getting it right the first time saves time, money, and stress.
Customs clearance works differently depending on whether you are importing or exporting.
Import customs clearance is the process of declaring goods arriving in the UK from outside the country, paying any applicable import duty and VAT, and securing HMRC’s release. The importer of record is legally responsible. Most importers appoint a customs agent to handle the declaration on their behalf. For a detailed breakdown of this process, see our guide to import customs clearance.
Export customs clearance is the process of declaring goods that are leaving the UK for an overseas destination. An export declaration must be submitted before the goods depart. HMRC uses this information to track exports, enforce trade controls, and generate trade statistics. Zero-rated VAT treatment for exports depends on having the correct export evidence, which the customs declaration provides. For a full walkthrough, see our guide to export customs clearance.
The key difference is financial. Import clearance typically involves paying duty and VAT. Export clearance is generally duty-free, but it requires correct documentation to support VAT zero-rating and comply with export controls.
Both processes run through the same HMRC system: the Customs Declaration Service (CDS).
The Customs Declaration Service, known as CDS, is HMRC’s digital platform for processing all UK customs declarations. It replaced the older CHIEF system (Customs Handling of Import and Export Freight), which was decommissioned for most import entries in 2023.
CDS is not a system you log into directly as an importer. It is used by customs agents and freight forwarders who are registered to file declarations on behalf of their clients. However, you do need to interact with it in one important way: you must be registered on CDS yourself to allow your customs agent to link to your account.
Registration requires an EORI number (Economic Operators Registration and Identification number). This is your unique identifier in the UK customs system. You cannot import or export goods commercially without one. If you do not have an EORI, registering for one is your first step.
Once your agent is linked to your CDS account, they can file import and export declarations on your behalf. The system processes most declarations automatically. It calculates duty, allocates a risk route, and issues the release decision. For the vast majority of shipments, this happens within minutes.
CDS also connects to other HMRC systems. The New Computerised Transit System (NCTS) handles T1 transit movements, where goods travel through the UK or EU under customs suspension. The Common Transit Convention (CTC) is the legal framework that governs these movements. If your goods travel across multiple countries before reaching their final destination, transit procedures become relevant. See our guide to the T1 transit document for more detail.
Your customs agent files the declaration, but they depend entirely on the information you provide. Giving them accurate, complete information is the single most important thing you can do to avoid delays.
Here is the core information needed for an import declaration:
Your EORI number. This identifies you as the importer of record. Without it, no declaration can be filed in your name.
The commodity code (HS code). This is the numerical code that classifies your goods for customs purposes. It determines the rate of import duty that applies. Getting this wrong is one of the most common sources of error.
The customs value. This is the value HMRC uses to calculate duty. It is typically the transaction value: the price you paid for the goods, plus freight, insurance, and other costs to the UK border.
Country of origin. This affects whether preferential duty rates apply under trade agreements the UK has with other countries.
Commercial invoice. The seller’s invoice showing the goods description, quantity, unit price, and total value. HMRC will use this to verify the customs value.
Packing list. An itemised breakdown of the shipment by package, weight, and dimensions.
Transport document. A bill of lading for sea freight, an airway bill for air freight, or a road consignment note (CMR) for road freight.
Import licences or permits (if applicable). Some goods require a licence before they can be imported. Examples include certain food products, agricultural goods, textiles from specific countries, and dual-use goods. See our guide to dangerous goods if your shipment contains any hazardous materials.
Having all of this ready before your goods arrive at the UK port prevents last-minute scrambles and avoids unnecessary holds.
A customs broker, also called a customs agent or customs clearance agent, is a specialist who files customs declarations on behalf of importers and exporters. They know CDS inside out, understand commodity codes and valuation rules, and manage the relationship with HMRC on your behalf.
Do you need one? For most businesses, yes. Filing your own customs declarations is technically possible, but it requires you to register as a declarant on CDS, understand the full UK Tariff, and be familiar with HMRC’s rules on valuation, classification, and procedures. Most shipping coordinators handling their first customs entry are far better served by appointing a good customs agent.
A customs agent can act in two ways. As a direct representative, they file the declaration in your name and you retain full legal liability. As an indirect representative, they take on joint liability with you. The arrangement should be set out in writing before they file anything on your behalf.
Fees vary. Agents typically charge a flat fee per customs entry, plus any disbursements such as port fees or examination costs. Understanding what you are paying for is important. See our guide to customs broker fees for a breakdown of what to expect.
For businesses that import regularly at high volume, it is worth exploring whether bringing declarations in-house makes financial sense. But for most new shipping coordinators, outsourcing to a broker is the right starting point.
When goods are imported into the UK, two main charges typically apply: import duty and import VAT.
Import duty is a tax on goods entering the UK. The rate depends on the commodity code and the country of origin. Rates range from zero to over 20%, depending on the product category. You can check duty rates using the UK Global Tariff on the GOV.UK website. If the UK has a trade agreement with the exporting country, a preferential (lower or zero) duty rate may apply, but you must have the correct proof of origin to claim it.
Import VAT is charged at 20% on most goods (5% on certain goods such as some food products and children’s items). It is calculated on the customs value plus the import duty. So if your goods have a customs value of £10,000 and import duty of £500, the import VAT is calculated on £10,500.
For VAT-registered businesses, import VAT is usually recoverable on the next VAT return. However, the timing matters. Paying import VAT upfront at the border ties up cash. Postponed VAT Accounting (PVA) solves this problem. Under PVA, you do not pay import VAT at the border. Instead, you account for it on your VAT return, both as a charge and as a credit. This means VAT-registered importers have no net VAT cost at the point of entry. To use PVA, your customs agent must select the appropriate option when filing the declaration.
Duty payments are collected at the border, either at the time of clearance or through a duty deferment account. A duty deferment account allows HMRC-approved businesses to defer duty payments to a single monthly payment rather than paying on each individual entry. This is a significant cash flow advantage for regular importers. See our guide to duty deferment for details on how to apply.
Every product that crosses an international border is classified using a Harmonised System (HS) code. In the UK, these are called commodity codes. They are a standardised numerical system that identifies what a product is.
A UK commodity code is 10 digits for imports and 8 digits for exports. The first 6 digits are internationally standardised under the World Customs Organization’s Harmonised System. The additional digits are UK-specific.
The commodity code determines:
– The rate of import duty that applies
– Whether any trade remedies (such as anti-dumping duties) apply
– Whether the goods need an import or export licence
– Whether any prohibitions or restrictions apply
Classifying goods correctly is one of the most important and most technically challenging parts of customs clearance. The UK Tariff has thousands of commodity code headings, and similar products can sit in different codes depending on their composition, use, or production process.
If the wrong code is used, you could underpay or overpay duty. HMRC has the power to reclassify goods and collect any underpaid duty, plus interest and penalties. Getting classification right from the start is essential.
For a full explanation of how the system works, see our guide to HS codes.
Import duty is calculated as a percentage of the customs value. Getting the customs value right is therefore just as important as getting the commodity code right.
The default method is called the transaction value method. Under this method, customs value equals the price actually paid or payable for the goods when they were sold for export to the UK, plus certain adjustments.
Those adjustments typically include:
– Freight costs to the UK border
– Insurance costs to the UK border
– Any royalties or licence fees related to the goods
– Certain assists (items provided by the buyer to the seller free of charge to help produce the goods)
The customs value is essentially the CIF value (Cost, Insurance, Freight to the UK port of entry). If your supplier quotes you on an FOB basis (Free On Board, meaning the price at the port of origin), you need to add the freight and insurance costs to arrive at the customs value.
If the transaction value method cannot be used (for example, because the buyer and seller are related parties and the relationship has influenced the price), there are five alternative methods. HMRC’s guidance sets out the hierarchy.
Undervaluing goods to reduce duty liability is a serious offence. HMRC has access to price databases and actively checks declared values against market benchmarks. For a full explanation of how customs valuation works, see our guide to customs valuation.
Not every parcel crossing the UK border goes through full customs clearance. There is a threshold below which import duty is not charged.
The de minimis threshold for import duty in the UK is £135. Goods with a customs value at or below £135 are not subject to import duty. This covers the vast majority of low-value B2C (business to consumer) e-commerce parcels.
However, VAT still applies to all goods regardless of value, including those below £135. For goods sold directly to UK consumers with a value below £135, the VAT must be collected at the point of sale by the seller. This is why overseas e-commerce sellers shipping small parcels to UK consumers must now register for UK VAT and charge it at checkout.
The £135 threshold is based on the intrinsic value of the goods, not the total cost of the consignment. It does not include freight or insurance.
For B2B imports (business to business), the standard VAT rules apply, and Postponed VAT Accounting can be used regardless of consignment value.
This threshold is relevant if you are importing small quantities for testing or sampling. For regular commercial imports, the threshold rarely applies.
When your customs declaration is submitted to CDS, it goes through an automated risk assessment. HMRC assigns every entry to one of several routes.
Green Route means the goods are released immediately. No further checks are required. This is the outcome for the majority of declarations.
Route 1 (documentary check) means HMRC wants to see supporting documents before releasing the goods. Your customs agent will need to submit the commercial invoice, packing list, and any other requested documents. HMRC then reviews these against the declaration. This typically takes a few hours to a day or two.
Route 2 (physical examination) means HMRC or Border Force wants to physically inspect the goods. The container or consignment is moved to an examination bay. Officers check the goods against the packing list and may take samples. Physical examinations can take from a few hours to several days, depending on complexity and HMRC’s workload.
Being selected for examination does not necessarily mean something is wrong. Some examinations are random. Others are targeted based on the nature of the goods, the country of origin, or the importer’s history. First-time importers, new suppliers, and certain product categories attract more attention.
The costs of an examination fall on the importer. Terminal handling fees, examination fees, and any resulting delays can add significant expense to a shipment. Maintaining accurate declarations and clean compliance history reduces your risk of being selected.
Delays at customs clearance are common, but most of them are avoidable. Here are the most frequent causes and what to do about them.
Missing or incorrect documents. The commercial invoice, packing list, and transport document must all be accurate and consistent with the customs declaration. Discrepancies between documents and the declaration trigger queries. Make sure your supplier sends you complete documents before the goods arrive.
Wrong commodity code. An incorrect HS code can cause HMRC to query the declaration or reclassify the goods. Take time to classify your goods correctly before the first shipment. If in doubt, seek advice from your customs agent or apply for a Binding Tariff Information (BTI) ruling from HMRC.
Missing EORI number. Without a valid EORI number, no declaration can be filed in your name. Register early. It usually takes a few working days to receive. See our guide to EORI numbers.
Late instructions to your customs agent. Customs agents can only act on the information you give them. If your goods arrive at port and your agent has not received instructions, the goods will sit waiting. Set up a clear process for sending instructions to your agent in advance of arrival.
Licences and permits not obtained. Some goods need a licence before they can be imported. If the licence is missing at the time of clearance, HMRC will hold the goods until it is provided. Check licence requirements for every new product category before you place an order.
Incorrect country of origin. If you are claiming a preferential duty rate under a trade agreement, you must have the correct origin documentation. Without it, the standard (higher) duty rate applies.
Building a pre-shipment checklist that covers all of these points will prevent the majority of clearance delays.
HMRC offers several schemes that allow regular importers and exporters to reduce the administrative burden of customs clearance and improve cash flow.
Authorised Economic Operator (AEO) status is a certification that recognises businesses with a high level of customs compliance and supply chain security. AEO-certified businesses receive benefits including faster processing, fewer examinations, and simplified access to customs procedures in some cases. It is not easy to obtain: the application process is thorough and HMRC expects high standards. But for businesses with substantial import or export volumes, the benefits are real. See our guide to AEO certification for full details.
Simplified Customs Declaration Procedure (SCDP) allows authorised importers to release goods immediately using a simplified frontier declaration, with the full declaration submitted within a set period after release. This reduces port dwell time because goods do not need to wait for a full declaration before they can be released. The procedure requires prior HMRC authorisation. See our guide to SCDP for the requirements and application process.
Duty deferment allows HMRC-approved businesses to consolidate all duty and import VAT payments into a single monthly payment rather than paying on each individual entry. This improves cash flow, particularly for businesses importing frequently. See our guide to dduty defermentecurity HMRC requires.
These three schemes work well together. Many larger importers hold AEO status, use SCDP to speed up clearance, and use a duty deferment account to manage payments efficiently.
A bonded warehouse, also called a customs warehouse, is a facility where goods can be stored under customs supervision without paying import duty or VAT upfront.
This is useful in several situations. If you import goods but are not sure of their final destination (some may be re-exported, some may enter UK free circulation), a customs warehouse lets you defer the duty decision until you know. Duty and VAT are only paid when goods are removed from the warehouse for release into free circulation. If goods are re-exported, no UK duty or VAT is ever paid.
Bonded warehouses are also useful for managing cash flow. If you import large quantities of goods at once but sell them gradually over several months, you pay duty only as you release stock for sale. You do not pay everything upfront on import.
There are rules around what can be done with goods in a bonded warehouse. Processing, repackaging, and labelling are permitted under certain conditions. The warehouse operator must be approved by HMRC, and the goods must be tracked within the warehouse management system.
See our guide to bonded warehouses for a fubonded warehouses.
If you are manufacturing goods in the UK using imported materials that will ultimately be exported, Inward Processing Relief may also be relevant. It allows you to import materials duty-free if the finished goods are exported.
Before Brexit, goods moving between the UK and EU member states benefited from free movement within the Single Market. There were no customs declarations, no import duty, and no customs clearance process for UK-EU trade. Goods moved freely.
Since 1 January 2021, the UK is outside the EU Single Market and Customs Union. All goods moving between Great Britain and EU countries are now subject to full customs controls. This was a fundamental change that created a new administrative burden for businesses that had never needed to deal with customs before.
What this means in practice:
For imports from the EU to Great Britain: A full import customs declaration must now be submitted on CDS. Import duty applies at the standard UK Global Tariff rate unless the goods qualify for preferential treatment under the UK-EU Trade and Cooperation Agreement (TCA). Under the TCA, goods with sufficient UK or EU origin can be imported duty-free, but you must have the correct proof of origin.
For exports from Great Britain to the EU: An export customs declaration must be submitted in the UK. The EU importer must then clear the goods through EU customs. This is a new cost and process for many UK exporters who previously traded freely with European customers.
Northern Ireland has different rules. Northern Ireland remains aligned with the EU Single Market for goods under the Windsor Framework. Goods moving between Great Britain and Northern Ireland are subject to the East-West checks under the Windsor Framework arrangements. This is a complex area in its own right.
The TCA also has rules of origin requirements that many businesses found challenging initially. Just because you buy goods from an EU country does not mean those goods have EU origin under the TCA rules.
If your business trades regularly with EU customers or suppliers, understanding the post-Brexit rules is essential.
Let’s walk through a real example to show how it all fits together.
The scenario: A UK electronics retailer imports 500 Bluetooth headsets from a supplier in Shenzhen, China. The goods are shipped in a 20-foot container by sea. The container arrives at Felixstowe.
Step 1: Pre-shipment preparation. The retailer has an EORI number and has appointed a customs agent at Felixstowe. BefEORI numberlassifies the headsets using the UK Tariff. The commodity code is 8518 30 95 (headphones and earphones). The applicable import duty rate from China is 3.7%.
Step 2: Shipment and documents. The supplier in Shenzhen ships the goods and issues a commercial invoice showing the FOB value: $45,000 (USD). The supplier also issues a packing list. The freight forwarder arranges sea freight from Shenzhen to Felixstowe and issues a bill of lading.
Step 3: Arrival and pre-entry. The vessel arrives at Felixstowe. Before arrival, the shipping line filed an Entry Summary Declaration (ENS) with HMRC through the Safety and Security system. The retailer’s customs agent receives the arrival notification from the freight forwarder.
Step 4: Declaration on CDS. The customs agent converts the FOB value to CIF (adding the sea freight of $3,200 and insurance of $200). The total CIF value in USD is $48,400. Converted to GBP at the HMRC exchange rate for the period, this gives a customs value of £38,720.
Import duty is 3.7% of £38,720 = £1,433. Import VAT is 20% of (£38,720 + £1,433) = 20% of £40,153 = £8,031.
The retailer uses Postponed VAT Accounting, so the £8,031 VAT is not paid at the border. It is accounted for on the next VAT return as both a charge and a credit. The £1,433 import duty is payable. The retailer has a duty deferment account, so this is deferred to the monthly payment.
Step 5: Risk assessment and release. CDS processes the declaration. The shipment is routed to Green Route (immediate release). The goods are released and the haulier delivers the container to the retailer’s warehouse.
Step 6: C88. The retailer receives the C88 customs entry document confirming clearance. This is kept on file as evidence of importation.
Total cost of the customs clearance process: £1,433 in duty (VAT-neutral under PVA), plus the customs agent’s fee (typically £50 to £120 per entry), plus the freight forwarder’s handling fees.
What is the difference between customs clearance and customs duty?
Customs clearance is the overall process of declaring goods to HMRC and obtaining their release. Customs duty is one of the charges that may be payable as part of that process. Not all clearances result in duty being paid: some goods attract a zero rate, and some shipments qualify for relief.
How long does customs clearance take in the UK?
Most declarations are processed automatically by CDS within minutes. Green Route shipments can clear almost immediately after the declaration is submitted. Documentary checks (Route 1) typically add one to two days. Physical examinations (Route 2) can take from a few hours to several days, depending on complexity.
Do I need an EORI number?
Yes, if you are importing or exporting goods commercially. An EORI number is your identifier in the UK customs system. Without one, no customs declaration can be filed in your name. You can apply on the GOV.UK website. See our full guide to EORI numbers.
Can I clear customs myself, without a customs agent? What happens if I pay the wrong amount of duty? What is the difference between a customs agent and a freight forwarder? What is Postponed VAT Accounting (PVA)? What is a duty deferment account? What goods need an import licence? What is Inward Processing Relief?
If you underpay duty, HMRC can issue a C18 (post-clearance demand) for the unpaid amount, plus interest. If you overpay, you can submit an amendment request to claim a refund. Both situations are time-consuming, which is why getting the commodity code and customs value right from the start matters.
A freight forwarder organises the transport of your goods. A customs agent handles the customs declaration. Many freight forwarders also offer customs clearance services, either in-house or through a partner agent. Some businesses use the same company for both; others use separate providers.
PVA is a UK scheme that allows VAT-registered importers to defer import VAT from the point of entry to their VAT return. Instead of paying import VAT upfront at the border, you account for it on your next VAT return as both output tax and input tax. For most VAT-registered businesses, this is VAT-neutral and improves cash flow.
A duty deferment account is an HMRC-approved facility that allows importers to consolidate all customs duty and import VAT payments into a single monthly direct debit. It requires a financial guarantee and prior HMRC approval. See our guide to duty deferment.
Licences are required for certain caduty deferment, food and feed products of animal origin, controlled drugs, firearms, dual-use goods, and goods covered by CITES (Convention on International Trade in Endangered Species). Check the requirements for each new product category before placing an order with an overseas supplier.
Inward Processing Relief (IPR) is a HMRC-approved procedure that allows businesses to import goods into the UK, process or manufacture theInward Processing Reliefduty on the original materials. It is relevant for UK manufacturers who import raw materials or components for processing. See our guide to Inward Processing Relief.Key Takeaways
This article is part of a learning path — return to explore more topics.
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