Excise Duty – What is Excise Duty?
Excise Duty is a tax that is designed to discourage the purchase of particular goods.
If you import goods from abroad, you might need to pay a few different types of taxes or duties. Find out more about different kinds of import duty.
Excise Duty is an indirect tax. This means that the end consumer is not responsible for paying the tax to the government, but they do cover the cost of the tax by paying more for the product.
By making products more expensive, Excise Duty is supposed to discourage the consumption or waste of goods that are deemed to be harmful to consumers' health or damaging to the environment. Typically, Excise Duty covers alcohol, tobacco, and some energy products.
Which goods are covered by Excise Duty?
In the UK, there are four main types of products that are covered by Excise Duty:
- Alcohol: including beer, wine, cider, and spirits
- Tobacco products: including cigarettes, cigars, rolling tobacco, and chewing tobacco
- Gambling activities: including bingo, the National Lottery, machine games, and online games that involved the betting of money
- Hydrocarbon fuels: including light fuels, heavy fuels, biofuels, and road fuels.
In the UK, Excise Duty is aligned with the rest of the European Union. The EU has common rules that ensure Excise Duty is applied in the same way (and on the same products) in each of the 28 member states. This is intended to ensure fair competition, reduce administration, and prevent imbalances in trade throughout the EU.
Excise Duty and importing
When you import goods to the UK, you may need to pay a number of different taxes and duties, including Excise Duty. If you buy taxable products from abroad, Excise Duty may be charged on top of Customs Duty and VAT.
If you purchase alcohol, energy products, or tobacco products from a supplier in another EU country, you need to check that Excise Duty is included in the price you pay. If not, your goods may be seized by customs officers.
If you import certain products from outside of the European Union, you will need to pay Excise Duty to the UK government. You pay the same rates as if you were buying products from within the UK, and the rates vary from product to product.
Excise Duty in Australia
In Australia, excise duty is applied to alcohol, tobacco, and certain fuel products; these are known as ‘excisable goods’. Any business that manufactures or stores excisable goods in Australia is required to have an excise license and may need to pay duty.
Alcohol, tobacco, fuel, and petrol products imported from abroad are considered ‘excise equivalent goods’ and are taxed at the same rate as excisable goods produced in Australia.