The UK has announced its new UK Global Tariffs which identify the rate of duty due on goods imported into the UK from 1 January 2021. The Farms and Landed Estates team at Chartered Accountants and Business Advisors, MHA Larking Gowen, has studied the potential impact of the new UK Global Tariffs on businesses purchasing agricultural machinery. Their study shows that importers of agricultural machinery may be better off under the new tariffs.
Whilst many tariffs remain unchanged or have merely been converted from Euros to British Pounds, there are also a significant number of simplifications and liberalisations. Simplifications are where rates have been rounded down for simplicity and liberalisations are where rates have been reduced to nil to assist UK manufacturers, such as in the agricultural machinery sector.
For businesses who are used to importing goods into the UK from outside the EU, there may be a reduction in the amount of duty due on those imports. However, for businesses bringing goods into the UK from Europe, there may be an additional cost from 1 January 2021 which needs to be identified and budgeted for.
MHA Larking Gowen agriculture specialist, Laurie Hill, said: “Our analysis of the UK Global Tariff confirms that the new tariff favours the importers of agricultural equipment as the rates have been liberalised (0% duty) for much agricultural machinery, such as sprayers, loaders, ploughs, rotovators, some harvesting machinery and more.”
Normal tractors (e.g. with a cab) with engine power above 18kw will remain at 0%.
Laurie continued: “Therefore, for businesses importing from the continent, there will be no additional duty charge, and for businesses importing from outside the UK and the EU, there may be a saving. It should be noted, however, that just because the UK is proposing liberalised rates, the EU cannot be expected to do likewise, therefore UK businesses exporting to the continent may find prices squeezed or customers looking elsewhere on mainland Europe for goods.”
Agricultural machinery experts, Ben Burgess, is just one firm who may be affected by the UK Global Tariff.
Ben Turner, Managing Director at Ben Burgess, said: “We, like many other agricultural dealers, are keeping our fingers and toes crossed as our industry is focused on improving the efficiency of farmers who produce food for us all to eat and hopefully will be spared any increases in duty.
“We are also lucky as most tractors and equipment are sold to us by the manufacturers in British Pounds, which is a great help as it allows us to be competitive as we know our costs.”
Commenting on exporting used equipment, Ben continued: “Our concerns at this moment are with the sale of used equipment either to Europe or further afield which are vital to the success of our industry as dealers cannot trade when their yard is full of used machines.
“DEFRA’s Certification of used farm equipment for export (certificate of cleanness, meaning no soil) is being demanded by more countries. This requires all the wheels to be removed from the tractor or machine so it can be thoroughly cleaned, costing about £250 plus per machine. We also have to arrange a visit by our local DEFRA inspector, meaning time spent, and pay the certification fee of £180. If soil is found at the port of entry a cleaning fee for removal of the potentially contaminated soil could cost many hundreds of pounds before the machine will be released to the end buyer. There are a lot of places for soil to hide on a machine that has spent its life immersed in it!”