Businesses trading in the United Kingdom, the European Union, and around the world are required to comply with customs procedures and regulations in line with national trade policies.
Companies and businesses selling to consumers in the UK are subject to specific trade rules depending on the goods they trade. One such rule is the obligation to implement the correct commodity code for purposes of customs tariffs.
Your business will need to implement commodity codes for specific goods on customs declaration forms in order to ensure compliance with import and export tariffs.
This article will define and explain rules about UK commodity codes in the post-Brexit international trade environment. It will also explain the new rules about commodity codes in line with the UK’s withdrawal from the European Union. Some rules will differ between Great Britain (England, Scotland, and Wales) and Northern Ireland due to the retained membership of Northern Ireland within the European Economic Area (EEA) single market.
What is a commodity code?
Commodity codes are sequential strings of numbers that identify the specific type of goods on customs declaration forms within the international trade system.
Commodity codes quickly identify important information about the imported or exported goods to customs agents, such as the relevant customs duties and other relevant charges, preferential trade treatments, and potential prohibitions and restrictions against a shipment in line with national trade policies.
Customs declarations forms are an important regulatory requirement of businesses and companies in order to share information on taxation, customs, and movement of restricted goods. They apply to both imported and exported goods and are handled by national customs authorities at borders.
In the United Kingdom, commodity codes are generally between 8 to 10 digits in length. This combines the 6-digit Harmonised System (HS) code and a country-specific code. These commodity codes will differ between imports and exports and are highly dependent on the type of goods being traded. Customs declarations and commodity codes are a shared responsibility between the United Kingdom Border Agency, which manages customs in the UK, and Her Majesty’s Revenue and Customs (HMRC) Customs Declaration Service.
Other countries around the world use different commodity code systems. Whilst the majority of countries use the same 6-digit Harmonised System (HS) code to begin their commodity codes, the remaining digits and classifications may be different than those in the United Kingdom. The European Union uses the additional Combined Nomenclature (CN) and Integrated Tariff of the European Communities/TARif Intégré Communautaire (TARIC) in its commodity codes. Combined Nomenclature adds an additional two digits after the HS code. The TARIC adds an additional 2 to 6 digits at the end of the commodity code. These additional digits add greater specificity to HS codes and implement information required by EEA customs regulations. You will need to ensure that all commodity codes for your business or company follow the correct customs requirements and regulations depending on the final destination of your goods.
What are commodity codes used for?
You will be required to pay different import and export tariffs depending on the type of goods and the value of the goods. Commodity codes are used to standardise, classify, and declare the relevant import and export tariffs for specific goods in each country around the world. You will pay different import and export tariffs depending on the commodity code for specific goods, in accordance with national taxation rates.
Commodity codes are included on official customs declarations forms so that your goods can smoothly process across borders. Commodity codes are highly specific depending on the type of goods. You must ensure that you utilise the correct commodity codes for your customs declaration forms in order to avoid delays in the customs process. If you make a mistake on customs declaration forms, you may be required to pay back taxes on imported or exported goods or face potential fines from the relevant national trade and taxation authorities.
What are the categories for commodity codes?
Commodity codes within the UK and Europe fall under a number of categories and sub-categories. These are known as Chapters and Headings in the commodity code classification system. The following categories will assist you in finding the correct commodity code for your goods.
Live animals and animal products
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Vegetable products
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Animal and vegetable waxes; prepared edible fats; animal and vegetable fats, oils and cleavage products
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Mineral products
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Products from the chemical and allied industries
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Plastics and related items; rubber and related items |
Raw hides and skins, leather, furs, and related items; saddles and harnesses; travel goods, handbags, and related items; items made of animal guts other than silkworm guts |
Wood and wood articles; wood charcoal; cork and related items; items made of straw, esparto, and other plaiting materials; baskets and wicker items
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Textiles and textile items
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Footwear, umbrellas, headwear, sun umbrellas, walking sticks, seat sticks, riding crops, and whips; prepared feathers and related items; artificial flowers; articles made of human hair |
Articles made of plaster stone, cement, asbestos, mica, and similar materials; ceramic products; glass and glassware |
Cultured and natural pearls, precious and semi-precious stones, precious metals, and metals clad with precious metals; imitation jewellery; coins |
Base metals and articles made of base metals
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Machinery and mechanical appliances; electrical equipment and parts for electrical equipment; sound reproducers and recorders; television image and sound reproducers and recorders; related items |
Nuclear reactors; boilers; machinery and mechanical appliances; related parts |
Electrical machinery and equipment; related parts; sound reproducers and recorders; television image and sound reproducers and recorders; related accessories and parts |
Aircraft, vehicles, vessels, and related transport equipment
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Photographic, cinematographic, optical, checking, measuring, precision, surgical, and medical instruments; watches and clocks; musical instruments; related items |
Ammunition and arms; related items |
Miscellaneous manufactured items
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Works of art, antiques, and collectors’ piecesIn line with the above list, you will need to research the relevant categories for your goods in order to choose the correct commodity codes. There is a correct commodity code for all tradeable goods, no matter your industry. |
What is the format of commodity codes?
Commodity codes in the UK have changed since the end of the Brexit transition period on 31 December 2020. Commodity codes in the UK follow a 10-digit format for imports and an 8-digit format for exports. format through the global standard Harmonised System (HS). UK commodity codes are broken down in the following pattern:
- Digits 1 to 2 – Harmonised System (HS) Chapter code for the relevant goods
- Digits 3 to 4 – Harmonised System (HS) Heading code for the relevant goods
- Digits 5 to 6 – Harmonised System (HS) Subheading code for the relevant goods
- Digits 7 to 8 (imports) or 7 to 10 (exports) – Country-specific code, depending upon whether goods are to be imported or exported
How can I look up a commodity code?
You can look up a commodity code for your goods by using the Trade Tariff tool from the UK Government. The Trade Tariff tool will provide you with the relevant commodity codes for importing, exporting, tariff duty calculation assistance, and the Value Added Tax rate for the specific product if destined for the UK. This tool includes valuable information on import measures and restrictions from countries around the world in one webpage.
You can use the Trade Tariff tool for all products traded by your company in order to ensure accurate and up-to-date information. In order to look up the commodity code for your goods, you will need to know and submit some information about your goods such as the following:
- What is the type of product?
- What is the purpose of the product?
- What materials were used to make the product?
- How is the product packaged?
- What were the production methods used to make the product?
There are some products that can be difficult to classify due to the materials made to create the products and the purpose of the products. There is additional information available from Her Majesty’s Revenue and Customs (HMRC) on the following product categories:
- Wood
- Vehicles, bicycles, and related accessories and parts
- Games, toys, and festive articles
- Tobacco products
- Textile apparel items
- Rice
- Plastic products
- Pharmaceutical products and placebo products
- Organic chemicals
- Leather goods
- Iron and steel products
- Herbal supplements, medicines, and tonics
- Footwear
- Electrical lamps
- Electrical Equipment
- Vegetables, fruit, and nuts for human consumption
- Aircraft and drone parts
- Computer hardware and software
- Ceramic products
For products made of various substances, you should categorise the product by the highest percentage substance.
What is an HS code?
A Harmonised System (HS) code is a global commodity code organisational system through the Harmonised Commodity Description and Coding System. It is used to standardise and categorise traded goods for customs and taxation purposes. The Harmonised System has been in place since 1988 and is utilised around the world by the majority of countries. HS codes are broken into three parts:
- HS Code Chapter (2 digits)
- HS Code Heading (2 digits)
- HS Code Subheading (2 digits)
HS codes comprise the first 6 digits of UK commodity codes. The HS code system is regularly maintained and updated by the World Customs Organisation (WCO) in line with developments within the international trade system and changing needs of individual countries.
Commodity codes post-Brexit
Prior to Brexit, trade between the United Kingdom and the EU Member States did not require customs declaration forms for the majority of businesses and companies engaging in international trade due to British membership in the European Economic Area (EEA) single market. Customs tariffs were one of the major points of contention throughout the Brexit withdrawal agreement process. Adherence to commodity code regulations was required by fewer UK companies and businesses.
Since the end of the Brexit transition period on 31 December 2020, businesses in Great Britain (England, Scotland, and Wales) exporting goods to Europe and European businesses importing goods to Great Britain will be required to lodge customs declarations forms and adhere to regulations around commodity codes and customs tariffs.
These new rules apply differently in Northern Ireland, as the nation remains part of the EEA single market due to the Northern Ireland Protocol of the EU-UK Withdrawal Agreement. Whilst Northern Ireland will be subject to UK taxation and economic regulations as relevant within the UK, the nation will retain ties to the European Union on many important international trade rules within the EU related to the EEA single market.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
