Our post-Brexit shopping habits are in for a change

Personal financial columnist Jill Kerby takes us through the impact Brexit has had on online shopping and the pitfalls for shoppers...

A radio item last week about how the new post-Brexit VAT and customs regime for cross-border and UK shoppers will result in higher prices reminded me of how nerve-wracking our summer family shopping trip across the southern Quebec/US border was when I was a child.

Living in Montreal meant that we were only c100 kilometres from Plattsburgh, New York, on the western side of Lake Champlain, and on the eastern side, c150km from Burlington, Vermont.

Then, the goods in their shops were mostly made in America, not China or Bangladesh or Morocco, and even with a higher currency differential, prices in Plattsburgh and Burlington were lower compared to what we had to pay once import tariffs and customs duties were added.

Having diligently saved her housekeeping pennies over the previous year, my mother’s annual US shopping day excursion targeted the standard school uniforms and lots of Fruit of the Loom underwear. She also bought quality percale sheets and thick towels.

We were a big, single-income family of five kids, two parents and a grandfather, and we quickly grew out of our uniforms and used a lot of towels.

Much to my poor father’s dismay, my mother was a superb school uniform smuggler and we younger kids were her inadvertent accomplices: “We’re taking the children to Plattsburgh/Burlington beach, officer,” as we crossed the border. In case anyone asked, the bags of ‘legal’ items were in full view coming home. The others, outside the customs limit, were tucked under wet towels and bathing suits, strollers and picnic hampers in the boot.

Moving here from Canada was a delightful revelation: No customs or excise duty to pay when visiting EU member states. I never fail to get a little shock by the restrictions and strict limits on the value of goods that I can take into or out of Canada or the US. Most Europeans, I suspect, have no idea what volume limits or duty apply to alcohol, tobacco, perfume/toilet water volume or other in third country purchases.

The UK now falls into that category, whether we buy goods while visiting the UK or from online UK retailers.

According to the Irish Revenue Commissioners (see revenue.ie), you may have to pay Irish Customs Duty, Excise Duty, Anti-Dumping and Countervailing Duties (these mainly refer to cheap imports from countries with lower material and labour costs) and Irish Value Added Tax. UK goods will have already include their VAT.

No Irish duty or 21% VAT is payable on goods worth under €22, but this amount includes transport, insurance and handling costs.

All goods worth €150 or more will attract Irish customs duty and VAT is payable on all alcohol, tobacco, perfume or toilet water “regardless of their value”. From July 1, 2021, states Revenue, import VAT “will be payable on all goods entering the EU, irrespective of their value and will always be collected irrespective of the amount due”.

The UK retailer may add these charges automatically but, if not, An Post and private couriers are designated by Revenue to make the collection on your doorstep, though there is some suggestion An Post workers may resist that responsibility on security grounds.

The Revenue site provides examples of the higher costs you may incur buying from a UK website (Be careful when ordering from what you think is an Irish website - if your order is being shipped from a central UK warehouse, you will potentially incur the duties and VAT.)

Their first example is a pair of adult sport socks with a retail value of €15 plus handling/transport/insurance costs (€2). Because that €17 combined value for VAT purposes is below €22, there is no VAT liability. But the An Post or courier delivery charge for customs clearance is a minimum of €10 or 1% of the parcel or package. Those socks have now cost you €27.

Far more alarming is the cost of an adult sports jersey, shorts and socks worth €152 in total. The Revenue reveals that between a handling, transport and insurance (HTI) charge of €15; customs duty of 12% on each item (plus the HTI charge); 21% VAT on the new, cumulative total of €187.04; and an estimated €10 An Post or courier charge the original retail cost of €152 has now become €236.32.

Some UK retailers with Irish registered companies are trying to assure their customers that they won’t be paying VAT twice or any customs duty when they order online with them as they will absorb those costs. Perhaps not, but we should expect their prices to rise.

There is only one winner here – Irish companies that manufacture here or source their goods inside the EU. ‘Shop Local’ has never been so timely a message.