International trade: Commodity codes when moving goods
Posted: Thu 1st Dec 2022
Whenever you move goods, you need to assign certain master data to them. The master data you assign to your goods may affect how much customs or excise duty you pay.
Custom master data includes commodity codes. These codes are used across the world to classify goods that are imported or exported. Having the correct code helps make sure you're keeping to customs rules and paying the right taxes and duties. It also indicates whether any licences are needed.
In this blog, we explain commodity codes in more detail: what they are and how they're used. We also tell you where to go online to check commodity codes and find the ones you need.
What is a commodity code?
Commodity codes are reference numbers assigned to goods that move into or out of the UK. Recognised worldwide, they are used to describe a specific product being imported or exported. They are usually 10 digits long (sometimes eight for exports).
Why are commodity codes used?
Each commodity code accords to a set tariff of taxes that the government imposes on goods imported from another country. The exact amount of tax charged varies between commodity codes, which is why it's so important to make sure the code you're using is correct.
Whenever you complete a customs declaration, you'll need to provide the correct commodity code, as it helps calculate:
the rate of customs duty and import VAT owed
any taxes due
any preferential rates that may apply to the goods being moved
It also determines whether:
you need an import licence to move your product (for example, if you're importing animal products, medicines or hazardous chemicals)
any anti-dumping duty will be charged
Why do I need a commodity code?
When you move goods into or out of the UK, you're charged customs duty. This is worked out as a percentage of your product's value.
HM Revenue & Customs (HMRC) asks you to provide the correct commodity code for your product so it can classify your product and accurately calculate how much duty you must pay.
Consequently, it's vital that you give the right commodity code. If you declare your goods with an incorrect code, HMRC may not release your goods. It's also likely that you end up paying far more in costs and fines than you otherwise would have done.
How do I find the commodity code I need?
You can search for commodity codes on the government's Trade Tariff website. When you use the Trade Tariff search tool, you'll need to be able to describe your product in detail, as this will make sure you're given the correct commodity code.
The information you're asked to provide may include:
what type of product you're bringing in
what materials and production methods were used to make it
how it's packaged
How does the Trade Tariff tool work?
When you land on the web page for the Trade Tariff tool, you'll see this:
Simply type in what your goods are – or enter the commodity code, if you know it – and the tool will find the correct code for you.
Alternatively, you can:
What if I'm importing goods into Northern Ireland?
If you're importing goods into Northern Ireland from outside the UK and the EU and the goods are not 'at risk' of onward movement to the EU, you can use the Trade Tariff to search for your commodity codes.
If the goods are 'at risk' of onward movement to the EU, you should use the Northern Ireland (EU) Tariff to find your commodity code.
Is there software I can use to do this?
Yes! CustomsClear is an easy-to-use customs declarations software that integrates directly with HMRC – giving your business more control and visibility of where it is in the declaration process.
The software – built by Deloitte – is now serving UK businesses that are importing and exporting goods to businesses in the European Union (EU). You can easily find the right commodity code to classify your goods using everyday language and descriptions.
Look up your code by typing in descriptive words like the type of product or the material it's made from. To help narrow down the search, the lookup tool provides suggestions as you go.
Find out more about CustomsClear
Advice and information on how small businesses can successfully import, export and expand overseas, provided by Enterprise Nation in collaboration with Deloitte. Take me to the hub