UK unveils new post-Brexit global tariff regime

The new tax regime aims to have deals covering 80 percent of British trade within a period of three years.

Created On: May 19, 2020 16:19 IST
UK PM
UK PM

The United Kingdom on May 19, 2020 unveiled a new post-Brexit tariff regime to replace the European Union's external tariff. The new post-Brexit tax regime will continue 10% tariff on cars but will cut levies on many supply chain imports.

The new UK global tax regime has been formed as a part of its efforts to negotiate new trade agreements with countries across the globe, cutting free from the EU trade rules, which had bound it for decades.

The new tax regime aims to have deals covering 80 percent of British trade within a period of three years.

Key Highlights

•  The new British tax regime called the UK Global Tariff (UKGT) is expected to be simpler and cheaper than the EU's Common External Tariff. 

•  The tax regime will apply to countries with which the UK has no agreements and will remove all tariffs below 2 percent.

•  The new Global Tariff is expected to benefit UK consumers and households by cutting red tape and reducing the cost of thousands of daily-use products.

•  Under the new tax rules, levies on a wide range of products will be done away. This means that around 60 percent of the trade will come into the UK tariff free on WTO terms or through existing preferential access.

•  The UK will maintain tariffs on a number of products that support UK industries such as agriculture, automotive and fishing. It will remove tariffs on $37 billion worth of imports entering UK supply chains such as screws and bolts.

•  The government would also remove tariffs on products that support energy efficiency such as thermostats and LED lamps.

•  It will also introduce a temporary zero tariff rate on products being used to fight the COVID-19 outbreak such as personal protective equipment.

Background

The new UK trade regime will be set in pounds. It will be presented before the Parliament later this year. It is expected to come into force from January 2021.

The United Kingdom formally ended its 47 years of membership with the European Union on January 31, 2020. This marked the beginning of an uncertain future for the United Kingdom. The UK will now be required to sign a new free-trade deal with the EU on all goods and services. The move leaves Britain free to strike new trade deals around the world, which it was unable to do before under the EU rules. 

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