Import VAT on a car is normally 20%, but three main reliefs can cut it or remove it completely: the reduced 5% rate for classics (over 30 years old, original and no longer in production), Transfer of Residence relief for people moving to the UK, and Returned Goods Relief for a car coming back after being exported. Here is what each one is, who qualifies, and how they compare.
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1. The 5% classic rate
This is the relief that matters most for classics. A car over 30 years old, in its original condition and of a model no longer in production, pays a reduced 5% import VAT instead of 20%, and 0% duty. It works whatever the car's country of origin, so an American, Japanese or European classic all qualify.
The catch: age alone is not enough. HMRC expects the car to be original, with no substantial changes to the engine, chassis, steering or bodywork, and may ask for evidence of the age and originality.
On a £15,000 classic, the 5% rate instead of 20% saves over £2,000.
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Enter where your car was built, its age, the price and the shipping, and see the duty and VAT in pounds.
Work out my import tax2. Transfer of Residence relief
If you are moving your home to the UK, Transfer of Residence relief can remove both VAT and duty completely, bringing the tax to zero. It is designed for people relocating, not for buying a car to sell on.
The main conditions are that you owned and used the car for at least 6 months before the move, you lived outside the UK for at least 12 months, and you keep the car for at least 12 months after bringing it in. You normally have to apply for this relief before the car arrives.
Transfer of Residence is the most generous relief, taking both taxes to nothing, but it is tied to you moving, not just the car moving. If you qualify, it beats every other route. If you do not, one of the others may still help.
3. Returned Goods Relief
If a car was previously exported from the UK and is now coming back, Returned Goods Relief can waive the VAT and duty on the re-import. This is common with cars that went abroad for a few years and are being brought home.
The car normally has to come back within 3 years of its export (HMRC can be asked for more time only in specific cases, through the National Import Reliefs Unit). The other requirement that really matters is that the same person who exported the car is the one bringing it back. The car should also return unaltered apart from normal maintenance, with no upgrades that add value, and you need proof of the original export.
Say a UK car was exported to France. If you are the same owner and you bring it back within 3 years, Returned Goods Relief can apply. But if someone else buys that car in France and wants to import it to the UK, there is no relief, because the importer is not the person who exported it. The owner has changed, so the relief is lost.
A note on EU origin
People often lump this in with VAT relief, but it is not one. An EU origin declaration removes the customs duty on an EU-built car, not the VAT. So an EU car with proof of origin pays 0% duty but still 20% VAT, unless it also qualifies as a classic. Keep the two separate in your head: origin is about duty, the reliefs above are about VAT.
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A quick way to find your route:
- Car over 30 years old, original and no longer in production? The 5% classic rate, whatever the origin.
- Moving your home to the UK? Transfer of Residence, if you meet the ownership and residency conditions.
- Bringing back a car that left the UK? Returned Goods Relief, if you are the same owner who exported it.
- None of these? Standard 20% VAT, though EU origin can still cut the duty.
These can overlap. A classic you are bringing with you when you move might qualify under more than one, and the best route is not always obvious. That is the part we sort for you.
Since Brexit we have cleared over 1,500 vehicles. Get it wrong and you overpay or face a query; get it right and you keep thousands. Tell us your situation and we will find the cheapest legal way in.