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International online shopping in the UK has changed in the way that we find, purchase and ship products from overseas locations. One of the most notable requirements that all shoppers must be aware of are Commodity Codes. This article will explore what a commodity code is, what the differences are between commodity codes and the similar concept of HS Codes, and how these changes will affect the landscape of moving goods in and out of the UK.
What is a Commodity Code?
A Commodity Code is a type of classification code designated to any goods or products moving in or out of the UK. This numerical ten-digit number is attributed to a wide variety of goods, and every product's type/classification, materials, style, colour and more will be accounted for in this code. A commodity code will dictate things like the duty rating of a product and any restrictions on imports and exports from other countries. As well as this, a commodity code will convey important information such as:
- Whether or not you can apply for a preferential duty rating
- If your product needs an import license
- If any anti-dumping laws apply to your product
- All of the duty and VAT ratings you'll be charged for your products
These commodity codes are used internationally; agreed upon on an international level for a consistent approach to overseas trading. This approach makes the process of trading goods internationally much easier to follow and understand for everyone.
What is an HS Code?
A commodity code is not to be confused with an HS Code, which sounds incredibly similar on the surface. An HS Code, or Harmonised Systems code, is an international standard for calculating Import Duty tax that is controlled by the World Customs Organisation (WCO). Similarly to commodity codes, every HS code is designed to describe a particular product and its qualities; a process which then allows international governments to charge the right tariffs.
However, the difference between the two is that the commodity codes used in the UK are based in part on the HS Code for the corresponding product; using the first ten digits from the HS Codes. This is because the HS Code system is the primary basis globally for tracking trade goods. Over 180 countries (including the UK) use this system and as the foundation for their own systems of tracking tariff codes products.
Why do I need a Commodity Code?
You need a commodity code to ensure that your goods can be processed through international customs departments, and failure to include this information will result in processing delays, additional charges, and in rare cases a refusal to deliver products.
Depending on the company or service that you're shopping with, you might find that the commodity codes will be provided automatically for you to save you having to seek them out for yourself. With UK Postbox's Shop & Ship service, for example, we have built the commodity codes into our platform directly, which means that you can easily find the relevant codes for the products in question and include the information with your shipment. However, in the instances where this is not provided, then you will need to find the correct commodity codes yourself.
How do I find the right Commodity Code?
To find the right commodity code for your product, you need to visit the Trade Tariff website, where all the codes are housed. You can achieve this through a variety of methods:
- Perform a manual search through the Trade Tariff database yourself for the relevant product. This can be achieved by using the search filter function on the database and by searching for similar, relevant products.
- You can apply for an official BTI (Binding Tariff Information) ruling, which is usually a free service. A BTI is a written tariff classification of your goods, that assures that your goods have the correct commodity code. Depending on potential eventualities such as laboratory analysis costs, there may be a fee involved with attaining a BTI.
- You can email HMRC directly for further advice or guidance if you are struggling to find the right commodity codes for your products.
If you are importing or exporting goods from the UK, you must have a good understanding of what a commodity code is, and the more prominent role they will play in the international shipping of products and goods. To learn more about these tariff changes, you can follow GOV. UK's latest information here, and you can learn more about the effect these changes will have on online shopping by reading our blog article on international shipping with shop & ship here.