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Importing from Canada, to the UK, via Mexico - dooable or am I dreaming?
Hello everyone.
This is my first post on the Hubb, so let me start by applauding all those who have already contributed :clap:- a fantastic resource to be sure. Right, onto business then. I’ve just bought myself a new KLR 650 in Toronto and I intend to import it into the UK at the end of June. But rather than shipping the bike directly back from Canada (which is now rather pricey due to changes in legislation that means motorbikes are classified as dangerous goods), I’m planning on taking a three week jaunt to Mexico City, and shipping it back from there. My questions to the wise, are as follows: 1 Shipping: Does anyone know any decent (and cheap) air freight companies operating out of Mexico? – I’ve just e-mailed about sixty companies ranging from the likes of Lufthansa and DHL all the way down to El Flappio Wingso – but would be interested if anyone has made the trip recently. 2 Tax: Having already been hit by 14.5% sales tax in Canada, I'm trying to find out how much UK tax I'll have to pay. According to the user unfriendly HMRC website, it seems like I may have to pay a whole lot more, both in VAT and import duty. Is that right? If not, who’s the resident tax expert that can point me in the right direction? I should point out that the bike is currently registered under my Canadian friend’s name in Toronto, so when I ‘buy’ it off him in June, the bike will technically be second hand. It will also have about 4000 miles on the clock when it’s imported, but will only be 4 months old. Cheers everyone and ride safe. Tom |
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NOTE that you WOULD have been able to get the GST back from Canada when you left the country - IF you bought it new yourself. Too late for that. Quote:
Good luck. A better idea (for others in future with this idea) would PROBABLY have been to just buy it yourself in Canada, ride it some and bring it into the UK. I suspect you'd have saved quite a bit over what will now happen, at least the Canadian GST, and sales tax twice. You'll almost certainly have to pay the UK the same either way, as you normally need to have owned the bike for some years to save anything, or for it to be 10 or 20 or something like that years old to make a saving. |
Thanks for the rapid reply Grant. In terms of registering the bike in my name - I had thought about doing that, and in hindsight it may have been the better option. But, I'm hoping that if I 'buy' the bike off my friend for a few hundred dollars less than it's value new, then I'll be able to save a few hundred on import taxes to the UK. It'll be second hand after all!I think I'm right in saying HMRC charge duty on the value of the bike (based on the amount you paid for it) plus insurance and transport costs. Presumably there's something stopping me from buying the bike for a penny and shipping it in tax free, but I'm hoping they wont argue if I happen to get a 'bargain'.Thanks again.
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PS. I'm wondering if I could save some tax by temporarily importing the bike into the UK under my friend's name and then buying it off him after the 6 month grace period is up. That way the delivery and insurance costs may not be included in the duty and the bike will probably be worth a bit less as well.
PPS. Surely I wont have to pay the GST twice. If I buy the bike off my friend and have to pay tax on it, then exporting the bike from Canada should mean I'll be able to claim that back. |
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When you buy the bike from your friend in Canada to put the bike in your name, Grant says that you'll have to pay tax again, which is true, but you can get that back as a GST refund when you export it out of the country. I would make sure, when you leave Canada to get the proper export documents filled out to show the vehicle has left the country. You have the added concern of getting insurance (first, for riding down through the US, and then getting it at the Mexican border). If you plan on doing this, be very sure to get the insurance situation sorted. Once again, it would be a lot easier to do if the bike is in your name, as you leave Canada. The simplest solution is to buy the bike from your friend, and immediately export it to the UK directly from Canada, claiming a GST refund. Good luck. |
You will have to pay SALES TAX - not GST, twice. EVERY time a vehicle is sold there is sales tax on it, and it is NOT refundable. The GST on the FIRST sale would have been, but since YOU are not exporting it on that invoice you can't claim it back. And your friend can't at all as he is a Canadian. Kiss that money goodbye.
So you paid SALES TAX and GST on the initial purchase, AND you will again pay SALES TAX on the second purchase. They are around 6.5-7% each, for a total around 13.5%. sorry to be the bearer of bad tidings... :stormy: As for your friend importing it to the UK - if he's a Canadian, he's unlikely to be able to do that. He would need residence permission, and that's not easy to get and way too complicated for the purpose. It costs at least £300 just for the paperwork, and it's a LOT of paperwork. Forget it. BTDT! (Remember I'm a Canadian living in London, and yes I brought my bike in at no cost - but it was 15 years old. :) And I do have residence permission.) Ride it hard and long and bring it in old and cheap and well used. :) |
Tax
Quick note on taxes in Canada, there are two types on vehicles, federal GST (6%) and provincial sales tax PST (7%) here in B.C., which varies from province to province.
If a vehicle is bought for export, then you can avoid the GST. Too late in this case as already paid by the original purchaser. This is applicable on new vehicle sales and sales through an auto dealer. He will not have to pay GST again when he buys it off his friend. He will have to pay PST again on the private purchase on the declared value. Here in BC it is self declared but if it is too out of line you have to sign a form stating why it is less, usual reasons are rebuild, accident, etc. Probably too much of a hassle but if he were really keen on avoiding the PST, there is none in Alberta. So for next time, consider buying the bike there, and avoid paying the GST by exporting and avoid the PST as there is none. You do have the advantage of potentially setting the value for eventual import into the UK as it is a second hand vehicle transaction, so a bit of prospective planning could set the value at what it will be worth when it has 30K on it, and you'll have paper work to match. What I don't know is whether the UK will use that as a valid value for importation. Certain countries don't really care what you paid, they will just use a blue book value. |
Many thanks for your friendly responses – much appreciated. :thumbup1: Just to give you a bit of background – I am a Brit (and a fairly young one at that, 23), currently living in London but planning several adventures in the not to distant future (top of the list at the moment is a trans-Africa trip in 2008). The reason I've bought a KLR in Canada is because my friend (who is Canadian) and I, wanted to have the same bike for our trip. The KLR was the obvious choice in terms of budget and simplicity, but since it isn't available in the UK I thought the simplest option would be for my friend to buy the bike and I'd just buy it off him [so much for that theory]. I don't want to just ship the bike back to the UK directly from Canada [even though it would be infinitely simpler] because I want to make the most of having a bike on a different continent. I'm sure you'll all agree it's fairly hard to resist a quick jaunt through Monument valley and Baha. In terms of the tax, it seems that the GST and PST already paid on the bike are dead and buried. Fair enough - that's a price I'm willing to pay to be able to use the bike in North America. But this additional re-sales tax (the PST) seems like a blatant tax grab to me and one that could potentially be avoided. I've heard some rumours that the PST is refundable if the bike is exported within 30 days of purchase - does anyone know if that's true or simply wishful murmours? The other option is to re-register the bike in Alberta (where my friend actually comes from) and avoid the extra PST by doing the sale there. I suppose it all depends on the cost and hassle of re-registering and also whether Revenue Canada are wise to such behaviour [no doubt they are]. More than likely I'll end up just having to bite the bullet and pay the extra 8% in PST again. :censored: But on the bright side, I've still got myself a new bike and it was still quite cheap. And as we all know 8% of quite cheap is not much at all... Thanks again. |
Insurance + Importing KLR into UK
Interesting plans:
I see several problems here, or things you should investigate before taking your trip. I think the 8% tax is the least of your worries. I think the solution is pretty obvious. Since your friend is from Alberta, it's almost a no-brainer to register the bike in your name so that you'll be hit with less tax. Just make sure you can use a proper c/o address (for example your friend has relatives in Alberta). Non-residents can claim GST but not PST on items bought for export from Canada. Right now, the bike is in your friend's name, so you're likely an additional rider on his insurance policy. Which is likely fine (but it's a good idea to confirm this with the insurance co). For example I contacted my insurance co (State Farm) and they would have no problem having licensed riders outside North America use my bikes. Of course the insurance is only valid in the US and Canada. Now, when you get to Mexico, be sure you have a notarized letter of approval from your friend stating that he is the owner of your bike and permitting you to use it. I think this is pretty easy, and can even be done in Arizona. But I'd do it in Canada to be safe, before you leave, because it's a lot easier to get a notarized letter in Arizona near the border than it is to have to go back to Canada. Now, if you buy the bike from your friend before you start your trip, you then have the issue of finding your own insurance. I don't know if Canadian companies will insure non residents. I'm in this situation for the UK (I have a bike over there which I transferred to my name which I'd like to use when I travel to Europe maybe once or twice a year). My problem is, it's proving very difficult (and it may be impossible) to find UK insurance companies that will insure non residents. So, be sure to check this. The advantage of having the bike in your name of course is when you cross the border at Mexico you don't need anything notarized to say you need permission to ride it since you'll have the ownership. Once you reach Mexico, the insurance issue goes away because you have to buy separate insurance before you enter. Depending on what you find out, you can either buy the bike from your friend at the beginning or end of your trip, assuming you make a round trip. If I had to guess, you'd be better off buying the bike off your friend at the conclusion of your trip. Now, you have the issue of importing the bike into the UK. Can you easily import vehicles that were not originally meant for the domestic market? This is virtually impossible to do for the US. In other words, it's very hard to bring in a vehicle model that wasn't originally available in the US, unless it's more than 25 years old. The reason being, is that they get you on all kinds of things, such as high-beam aim (different if you drive on the left vs right of the road), speedometers (miles vs km) whether lights are always on, or can be turned on/off, and even colors of turn signals, emission standards, etc... The country where you are importing can make you change all these things to suit their standards before they'll let the import go thru, and that is where it can get expensive. Be sure to check this as well. I would contact a UK customs broker to see what's involved. Sorry, I don't want to rain on your plans, but it's important to think these things through before taking the trip. |
Not in Alberta
Just a quick note re: Tiger boy's take on the locationof the bike. I don't see anywhere that the bike is in Alberta. If that was the case the whole thing becomes somewhat easier.
There is no provincial sales tax (pst) in Alberta. As a matter of fact I think that you might want your freind to sell it to you in Alberta no matter where you are. Insurance in Alberta is all done through private insurance companies instead of provincial bodies. These companies will sell you pretty much whatever insurance you want. The exception being insurance for Mexico. For that you will want to go through someone like Sanborn's insurance. I don't know if this helps but that's the little that I know. Rick |
Following up on Tigerboy and Rig's comments:
My bike is currently in Toronto, as that is where my friend currently lives and where all his vehicles are registered. Re-registering the bike in Alberta would be the best way to dodge tax, but I think it would involve my friend re-registering all of his vehicles and changing his place of residence to his folk's place in Alberta. Since that process would cost about $70 per vehicle and involve a fair bit of hassle, it's unclear whether it'd be worth re-registering in Alberta or not. With the bike worth about $6000 new, and $5000 or less 'second hand' the tax would be about $400. Irritating but not bank breaking. But as Tigerboy quite rightly points out - the sales tax is probably the least of my worries. In terms of the insurance, it seems the simplest way to arrange insurance and shipping is with the bike in my name. As Rig points out - Canadian insurers tend to be happy for foreigners to insure their vehicles, as long as we pay for the privilege. I still have to check this out – but if anyone’s got any suggestions on cheap North American insurers I’m all ears!. The real problems are going to start when I try importing the bike into the UK. As well as all the taxes (VAT: 17.5% and import duty +6%), there are a number of things I need to sort out. Prime among them is getting the bike to pass the UK's single vehicle approval test. This is the test that any UK registered vehicle needs to pass in order to legally be allowed on Britain’s roads. Initially I thought the KLR would easily pass this test as there are several KLRs already on British roads. But having researched it a bit more thoroughly it seems like I may have to undergo some of the costly changes that Tigerboy has outlined. I've just e-mailed the DVLA in the UK to find out exactly what the test involves, but having read through their website (Importing and exporting a vehicle : Directgov - Motoring) it seems there is a heavy emphasis on noise and pollutant emissions. This could be a problem for the KLR as it's a real thumper. For now, I just have to wait and see what the test criteria are, but if anyone has recently brought a KLR (or any other big single for that matter) into the UK, I’d be very interested to know what they had to modify in order to make the bike road legal. Looks like my plans are taking a bit of a beating from reality. Lets hope blind ambition will see me through. Wish me luck. |
a bike is a disposable consumer good
It seems to me that you have two logical options .
A - Use the bike for touring in N America and then sell it . B - Be creative about importing the bike to the UK . You COULD locate a KLR frame at a breaker's yard or private individual in Britain . Then dismantle the new KLR in Canada .Ship it into Blighty in several large packages over a period of time . Then rebuild the bike onto the old KLR frame ,thereby utilising the old frame number for registration purposes . Ebay will take care of any surplus parts . The Irish guys used this method years ago so that they could buy Range and Land Rovers without having to pay exhorbitant taxes ,they would come over to England with an old Rangie have it stripped down to the chassis frame , refurbish the frame ,then plop on the body from a new vehicle ,refix the number plates and drive back to the Emerald Isle with a brand new {old } vehicle . [And then some enterprising individual in England would have a brand new frame and a shed full of old Rangie parts to build an off-road racer .] But of course you never heard any of this from me - right ? |
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