Sell to the UK – Overview
Sell to the UK – The United Kingdom departed the European Union on 31st January 2020. It subsequently concluded the EU-Uk Trade and Cooperation Agreement (TCA). As part of the divorce settlement between the UK and the European Union, Northern Ireland will remain aligned to EU customs and trade rules. Northern Ireland’s relationship with the UK and the EU has been subsequently updated under the Windsor Framework agreement.
The UK is the sixth biggest economy in the world. It is a global powerhouse in services, especially financial services. It is no longer considered a leader in the production of goods. In 2022 it made up 2.0% of the world’s Gross Domestic Product (GDP) (source: World Economic Forum).
The United Kingdom is a monarchy with a stable government. Its regulatory system will face challenges as the UK commences to decouple itself from its association with the European Union. It was a top-ranked country, placed 8th by the World Bank’s ease of doing business rankings.
The population of the UK is 68.14 million people. 16.91% of the population is under 15 years of age (source cia.gov). As is similar to most other Western countries, the UK has challenges with an ageing population, and even though it requires migrants to support its economy, there has been a backlash against migration. It is a British government policy to reduce the level of immigration into the UK.
The UK is still trying to come to terms following its departure from the European Union. Its a dynamic and changing situation for many businesses who deal with the United Kingdom.
UK Business culture
English is the official language of the United Kingdom.
The British business culture, for the most part, are more formal when compared to some of its former colonies. The minimum dress code is smart casual; however, salespeople should wear a shirt and tie. Appointments for meetings are required, and acknowledgement of correspondence is usually sought.
British businesses are open and willing to try out new ideas, products or services. However, time may be needed to build personal relationships but it is not to the same level as is required in Asia.
Business cards are exchanged quite soon after the beginning of a meeting.
Setting up in the UK
The UK government’s Department for Business and Trade has information for companies or individuals who are considering setting up in the UK.
There are a variety of market entry strategies for those firms who are considering entering the UK market, including:
- Direct Selling. Trade shows in the UK are commonplace, and they can be a convenient way to develop sales within the UK.
- E-commerce. The UK is a highly advanced environment for online business, and it offers solid prospects for long-term growth in e-commerce.
- Sales agent. It is strategically vital to determine if a regional or a national sales agent is required. Also note that, until Brexit, companies were to ensure that any agreements they put into place with agents were under EU laws – Council Directive 86/653/EEC. However, this may change as the UK deviates away from European Laws.
- Establishing a representative office. You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK. However, some types of companies cannot register as overseas company in the UK, including partnerships and unincorporated bodies.
- Franchising. The UK is friendly to franchise systems.
- Joint venture/ Strategic alliance. Joint ventures may be formed as limited liability companies or as equal or unequal partnerships. This approach makes it easier for companies to rent or purchase local premises and assets and to hire and manage a local workforce and support staff. No ownership or control restrictions apply to joint ventures in the United Kingdom.
Banking and Finance
The unit of legal tender in the United Kingdom is the Pound Sterling (£ GBP).
The UK and, in particular, London (aka “the City”) is a powerhouse for international Financial Services and Banking. Until Brexit, Global financial institutions such as banks, foreign exchange companies and insurance firms were using the UK as their base for the EU market.
Did you know that there are more U.S.-owned banks operating branches and subsidiaries in London than there are on Wall Street!
Business transactions in the UK are not affected by currency restrictions.
Sell to the UK – Tariffs and Non-Tariff Barriers
Tariff
Until 31st January 2020, the UK was part of the European Union trade bloc. While it was an EU member, the UK was automatically part of around 40 trade deals the EU had struck with more than 70 countries. The EU permitted the UK to copy these agreements. So far, the UK has managed to agree on 20 such deals, covering 50 countries or territories.
The UK’s biggest trading partner is the EU. They are currently in negotiations on a trade deal which aims to have zero tariffs, zero quotas and zero dumping. At the time of writing, this is proving difficult for both sides. If negotiators fail to reach a deal, the UK faces the prospect of trading with the EU under the basic international trading rules set by the World Trade Organization (WTO).
Concerning the rest of the world, the UK is undertaking a mammoth task of trying to secure trade deals to compensate for the loss of its free trade within the European Union. It will be an intense learning process for the UK as for the last 47 years, it was the EU who conducted International Trade negotiations on behalf of the UK.
Tariffs and duty rates are constantly revised and are subject to change without notice. To find commodity codes, duty, or VAT rates, visit the UK Customs Trade Tariff. For all other customs, enquiries visit HM Revenue & Customs (HMRC) page.
Non-tariff barriers
Import
An import license is not needed to import the majority of industrial goods into the UK; however, it does require import licences for the following products:
- Agricultural products
- Chemicals and firearms.
- Foods
- Medicines
- Plants and animals
- Textiles
For additional information on import requirements, please visit the UK Governments Starting to Import page.
To find the latest information on banned or restricted goods, please visit the Banned & Restricted page.
Product labelling, certification and packaging
Currently, labels in the UK must not only meet its national regulations but also must conform to European Union requirements. Information on the labelling of products in the interest of consumers and compliance procedures are available at Summaries of EU Legislation. Labels must be English.
Currently, food information and labelling legislation must comply with EU legislation. Please click on Food Labelling Information to learn more.
In the UK, it is required for labels to display origin, weight and dimension, chemical composition and appropriate hazard warnings any product offered for retail sale.
The UK uses the British Imperial measurement system.
Certification
The UK currently follows EU food requirements . However, it may have additional licencing and certification requirements for specific products. Information on these products can be found on the UK Governments Starting to Import” page.
Packing
You should have your packaging approved with the importer in the UK as their market might have some specific preferences. Goods should be marked according to UK requirements.
Methods of quoting and payment
Quotations should generally be listed in British pound sterling (GBP) and by CIF (Cost, Insurance Freight).
Payment terms should be agreed in advance, which can include 30/60/90 day terms. All parties must fully understand the agreed payment terms and that your client, representative or contact signs a mutually agreed document.
It is best practice for sellers dealing with new customers to use secured payment terms such as 100% payment before shipping, letters of credit, sight drafts or bills of exchange.
Both private and public credit insurance is available in the UK.
Sell to the UK – Documentary & Clearance Requirements
Documentation required:
For information about the documentary requirement of the UK, you should visit the UK’s Making a Full Import Declaration page.
Therefore, It is essential to keep updated with UK documentation requirements as, due to Brexit, these may change.
Customs process:
Most declarations are submitted electronically through the Customs Handling of Import and Export Freight (CHIEF) system.
So most UK businesses hire someone to deal with customs and to transport their goods from overseas, usually a Freight Forwarder or Logistics company. If you require the name of a UK Freight Forwarder or Logistics Company, please contact me.
Exporters to the UK can find information about the Import requirements of the UK from the UK Customs website.
Sell to the UK – Business Risks
The UK is in unchartered waters post-Brexit. The unknown and unintended political and trading implications of this has increased the risk of those trying into or out of the UK.
Therefore It is advisable to get freight insurance for your products. Goodada Freight Insurance provides clients with online insurance facilities.
So businesses wishing to operate in the UK should commit to the highest level of corporate behaviour and familiarise themselves with UK laws on bribery and the penalties about the corruption of officials.
Intellectual Property Protection
The UK Legal system offers high protection for Patents and trademarks. It is a member of the World Intellectual Property Organisation (WIPO). The UK’s Intellectual Property Office administers Intellectual Property Rights.
Dispute resolution
The UK has a highly established legal system. This system was intertwined with the legal system of the European Union. Since Brexit, there has been a decoupling of this. There are current negotiations about the influence of the European Court in UK trade affairs.
It is important to hire legal expertise for both jurisdictions.
Sell to the UK – Web Resources
British Chambers of Commerce
Business Wales
EU Customs
HM Revenue and Customs
Intellectual Property Office
Invest Northern Ireland
London & Partners
London Chamber of Commerce
National Statistics Online
Scottish Development International
UK Trading Standards
Department for Business, Innovation and Skills
UK Department for International Trade
UK Export Finance
Sell to the UK – About the Author
Aidan Conaty is the founder of Goodada & TCI China. Aidan is a qualified Management Accountant, was awarded a scholarship to study his MBA at Trinity College Dublin. He has a consultancy background in Management, International Business and Supply Chain.
Aidan can be contacted email at aidan@goodada.com or at:
- (Europe/ Rest of the World) +353 1 885 3919
- (UK) +44.020.3287.2990
- (North America) +1.518.290.6604