Cars imported from Europe will be taxed 10% from next year on post-Brexit tariff

20th May 2020

New cars imported to the UK from Europe will be subject to a 10% tariff unless an alternative trade deal is confirmed before the 1st of January.

The Department for International Trade (DIT) confirmed that car imports would revert to World Trade Organisation terms from 2021.

That means instead of the current 0% tariff on cars imported from the EU, this move will see EU imports subjected to the same import duty rates as cars from elsewhere in the world: 10%.

A tweet from the DIT confirmed a new UK Global Tariff¹ to replace the EU’s Common External Tariff at the end of the Transition Period.

The trade policy is designed to be easier for businesses to use while reducing cost pressures for consumers.

Many imported household items, including freezers, dishwashers and LED lamps, will benefit from zero tariffs. However, cars are not included.

International Trade Secretary Liz Truss said: “Our new Global Tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products.

“With this straightforward approach, we are backing UK industry and helping businesses overcome the unprecedented economic challenges posed by coronavirus.”

But what does this mean for drivers looking to buy a new imported car?

Some of the best-selling cars of the year will become considerably more expensive under the new plans, as they’re currently manufactured on the continent:

	Current price	10%	Final price
Ford Fiesta	£16,140	£1,614	£17,754
Volkswagen Golf	£21,145	£2,114	£23,259
Mercedes-Benz A-Class	£23,755	£2,375	£26,130

Source: https://www.smmt.co.uk/vehicle-data/car-registrations/ and https://www.ford.co.uk/cars/new-fiesta and https://www.volkswagen.co.uk/files/live/sites/vwuk/files/pdf/Brochures/golf-p11d.pdf and https://www.mercedes-benz.co.uk/passengercars/mercedes-benz-cars/models/a-class/hatchback-w177/offers-and-services/limited-times-offers-new.module.html

The motor industry is hoping that sales bounce back before the Brexit transition period comes to an end, after car sales in April suffered a 97% drop when compared to last year².

There are signs that the sector is recovering; Ford resumed production at UK factories this week (Monday 18th May) and the first Range Rover built under social distancing measures rolled off the production line today (Wednesday 20th May).

1 https://www.gov.uk/government/news/uk-global-tariff-backs-uk-businesses-and-consumers

2 https://www.smmt.co.uk/vehicle-data/car-registrations/

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