Last reviewed 29 June 2021

The UK formally left the EU at the end of January 2020 but remained within the single market and the customs union during an 11-month transition period in order to allow negotiations between the two sides over their future trading relationship. Those talks were successfully completed on 24 December 2020 with the EU-UK Trade and Cooperation Agreement being finally completed just one week before the end of the transition period. While 1 January 2021 saw the re-introduction of formalities and paperwork that had not been necessary for almost 50 years, the agreement has ensured that there will be no imposition of tariffs and quotas on trade between the two parties.

With the UK responsible for setting its own trade policy with countries across the world for the first time in several decades, however, this article explores the major changes that businesses can expect.

Most Favoured Nation

The keystone to the new policy will be a Most Favoured Nation (MFN) tariff schedule replacing the EU’s Common External Tariff (CET). This was published by the Government after a public consultation drawing almost 1400 responses. MFN status is offered by members of the World Trade Organization (WTO) to all other members and simply means that they will be treated equally: benefits and lower tariffs offered to one member must be offered to all, unless a trade agreement is in place.

Goods are not subject to the MFN requirement if they are traded between countries participating in such an agreement. The other main exception is that developing countries pay less or no duty if they benefit from a scheme known as the UK Generalised Scheme of Preferences (GSP) (see GOV.UK for details).

UK Global Tariff

The Government’s MFN policy is embodied in the UK Global Tariff (UKGT). This is, it argues, a simpler, easier to use (delineated in pounds not euros, for example) and lower tariff regime than the CET. The Department for International Trade (DIT) has claimed that it scraps red tape and other unnecessary barriers to trade, reduces costs and increases consumer choice. Again, details are available from GOV.UK.

Businesses should face fewer administrative burdens as the new schedule streamlines and simplifies nearly 6000 tariff lines. The changes include scrapping unnecessary tariff variations, rounding tariffs down to standardised percentages and removing all “nuisance tariffs” (those below 2%).

“We are also getting rid of the EU’s complex Meursing table,” the DIT explained, “allowing us to scrap thousands of unnecessary tariff variations on products — including over 13,000 tariff variations on products like biscuits, waffles, pizzas, quiches, confectionery and spreads.”

Changes in a nutshell

It is possible to download the full UKGT as an Excel file via the above link. This includes more than 11,000 lines, with the CET and UKGT duty shown side by side.

However, in short, the main changes include:

  • maintaining tariffs on agricultural products such as lamb, beef, and poultry

  • maintaining a 10% tariff on cars

  • maintaining tariffs for the vast majority of ceramic products

  • removing tariffs on £30 billion worth of imports entering UK supply chains with 0% tariffs on products used in UK production, including copper alloy tubes (down from 5.2%) and screws and bolts (down from 3.7%).

With regard to imports, the Government has focused reductions on those products likely to be of particular interest to consumers including:

  • dishwashers (down from 2.7%)

  • freezers (down from 2.5%)

  • sanitary products and tampons (down from 6.3%)

  • paints (down from 6.5%)

  • cooking products including baking powder (down from 6.1%), yeast (down from 12%), ground thyme (down from 8.5%) and cocoa powder (down from 8%)

  • scissors and garden shears (down from 4.7%)

  • bike inner tubes (down from 4%)

  • and Christmas trees (down from 2.5%).

Tariffs have also been cut on more than 100 “green” products to support renewable energy, energy efficiency, carbon capture and the circular economy through recycling and reducing single use plastics.

Covid-19 items

Almost all pharmaceuticals and most medical devices (including ventilators) 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 Government has introduced a temporary zero tariff rate on these products.

This relief waives the tariff and VAT for personal protective equipment (PPE), medical devices, disinfectant and medical supplies from non-EU countries.

The Government has continued to waive the tariffs on key Covid-19 items as it has begun implementing the UKGT in 2021. A list of the goods on which relief can be claimed is available at www.gov.uk/guidance.

How to check the tariff

Traders wanting to know how the UKGT will affect their business can check the tariffs that has applied since 1 January 2021 to goods they import by using the UKGT tool.

To use this service, they will need either the commodity code or description of their product. For those who are unsure, there is a link from the GOV.UK site to guidance from HMRC explaining how to find commodity codes.