Understanding Duty Relief Schemes: How to Reduce Import Costs Legally

Why Duty Relief Schemes Matter

Import duty can significantly increase the cost of bringing goods into the UK. But many businesses don’t realise that HMRC offers a range of duty relief schemes that can reduce or even eliminate these charges — provided the rules are followed correctly.

Duty relief schemes are designed to support manufacturing, repair, re‑export, temporary use, and legitimate commercial activity. When used properly, they can transform your landed costs and improve your cash flow.

This guide explains the key duty relief schemes, how they work, and how to use them compliantly.

1. Inward Processing (IP)

Inward Processing allows you to import goods for processing, repair, or incorporation into another product without paying import duty or VAT.

Common uses include:

• Repairing goods before re‑export
• Manufacturing finished products
• Processing raw materials
• Reworking or upgrading components

Key conditions:

• Goods must normally be re‑exported
• You must keep detailed processing records
• Authorisation may be required
• Strict time limits apply

IP is one of the most powerful reliefs for manufacturers and repair centres.

2. Outward Processing (OP)

Outward Processing allows you to export goods for processing or repair outside the UK and then re‑import them with reduced or zero duty.

Ideal for:

• Overseas repair work
• Upgrading or modifying goods
• Cost‑efficient manufacturing steps

Duty is usually charged only on the value added abroad.

3. Returned Goods Relief (RGR)

Returned Goods Relief allows goods that were previously exported from the UK to be re‑imported without paying duty or VAT, provided they meet certain conditions.

Useful for:

• Goods sent abroad for exhibitions
• Items returned by customers
• Equipment temporarily used overseas
• Faulty or rejected goods

Key conditions:

• Goods must normally return within three years
• They must be in the same condition (unless repaired under OP)
• You must prove they were originally exported

4. Temporary Admission (TA)

Temporary Admission allows you to bring goods into the UK temporarily without paying duty or VAT, as long as they are re‑exported.

Common examples:

• Exhibition equipment
• Professional tools
• Commercial samples
• Scientific or testing equipment
• Horses for competition

Strict conditions apply, including permitted uses and time limits.

5. Customs Warehousing

Customs Warehousing allows goods to be stored in a bonded warehouse without paying duty or VAT until they are released into free circulation.

Benefits include:

• Delaying duty payments
• Re‑exporting goods duty‑free
• Storing goods while awaiting orders
• Improving cash flow

Ideal for businesses with long‑term storage or fluctuating demand.

6. Preferential Duty Rates (Rules of Origin)

Under Free Trade Agreements (FTAs), goods may qualify for reduced or zero duty if they meet the agreement’s rules of origin.

Examples include:

• UK–EU Trade and Cooperation Agreement
• UK–Japan CEPA
• UK–Australia FTA

Correct HS classification and origin documentation are essential.

7. Tariff Quotas

Tariff quotas allow certain goods to be imported at reduced or zero duty up to a set volume.

Common for:

• Agricultural products
• Raw materials
• Industrial goods

Quotas are limited and often allocated on a first‑come, first‑served basis.

Common Mistakes When Using Duty Relief Schemes

Businesses often run into issues because they:

• Use the wrong relief scheme
• Miss re‑export deadlines
• Fail to keep proper records
• Apply incorrect procedure codes
• Misunderstand rules of origin
• Don’t obtain the required authorisations
• Assume suppliers understand the rules

Incorrect use can lead to duty reclaims, penalties, or loss of authorisation.

How to Choose the Right Duty Relief Scheme

To determine which relief applies, consider:

• What the goods are
• Why they are being imported
• Whether they will be processed, repaired, stored, or re‑exported
• How long they will remain in the UK
• Whether they qualify for preferential origin
• Whether authorisation is required

A customs specialist can help you avoid costly errors.

How We Help With Duty Relief

We support businesses with:

• Identifying the correct duty relief scheme
• Applying for authorisations (IP, OP, TA, warehousing)
• Reviewing HS codes and origin eligibility
• Preparing compliant documentation
• Managing ongoing customs processes
• Ensuring correct use of reliefs to avoid penalties

Our goal is simple: reduce your duty costs while keeping you fully compliant.

Explore More in Our Knowledge Hub

You can also read:

• HS Code Guides
• Importer Checklists
• Port Guides
• Customs Glossary
• Post‑Brexit Customs Advice

If you want help reducing your duty costs or understanding which relief applies to your goods, our customs specialists are ready to support you.

Get in touch for expert duty relief guidance and compliance support.