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Save money and beat rip-off Britain

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Had enough of rip-off Britain? Why not take matters into your own hands with PC Advisor's guide to buying from abroad. Whether you want to pick up a product from a US online store or bring back a bargain from a holiday, our tips could save you a fortune.

Some call it the land of the free; we've come to know America as the land of the cheap. Dear old Blighty, by comparison, is the realm of the rip-off. Everything costs an arm and a leg, including the latest technology.

If a UK resident were to go out and buy a retail copy of Windows Vista Home Premium tomorrow, they'd be lucky to get much change from £220. If they lived in the States, it would have been theirs for $259 – roughly £133. If they were then to buy a high-end desktop-replacement laptop – say, a Dell Inspiron 9400 with a T7400 Core 2 Duo processor, ATI X1400 graphics and 1GB RAM – they would have to part with just over £1,400.

For our US counterparts, the very same laptop would have cost no more than $1,701 – a measly £870. There are significant savings to be made on smaller items, too. A 30GB iPod at the Apple Store here will cost you £190. Visit the US Apple Store, however, and it's listed for a mere £119. And digital snappers also get a better deal in the States, paying just $559 (£286) for a Nikon D50 digital SLR with a 19-55mm lens. We poor Brits have to fork out £400.

But rather than stew with envy, have you ever wondered whether there's something you can do to avoid paying 'Limey tax'? We're going to turn the situation to your financial advantage. We'll show you how to use the web to import goods on the cheap, plus explain the ins and outs of bringing goods back into the country when you've bought them abroad.

The excuses

US prices aren't always as attractive as they first appear. Apple's US price tags, for example, are quoted excluding tax. The US has no standard equivalent to our VAT. Instead, there's a tax set by state or local government, meaning US buyers always face an additional, hidden cost – often up to 10 percent – on their purchases. But this hardly explains the vast discrepancies between UK and US pricing.

Other factors vendors acknowledge include exchange rates, local import laws, business practices, taxes and the cost of doing business. These vary from region to region and, over time, are such that international prices are not always comparable to the US suggested retail prices. Steve Dunn, Microsoft's director of finance, adds: "The costs incurred in delivering European packaging and settings plus the cost of marketing in many languages [and] the scale and volume of the US market will drive a price differential."

Note that we're not singling out Apple or Microsoft for unfair treatment. You'll find similar discrepancies in pricing everywhere you look.

Can we accept these claims?

The current pound-dollar exchange rate is extremely high, but it's hardly unprecedented. The pound hasn't been worth less than $1.8 since April 2006, so companies that work on a $1-1.5 rate are rather over-cautious.

And while the UK government hits us hard with 17.5 percent VAT, not to mention import duties, neither this nor the exchange rate properly explains why we're charged nearly twice as much as our US friends. You'd pay less in Japan, too.

There are extra costs incurred in preparing products for other markets. A US camera is much the same as one designed for Germany, but someone has to translate the interface and manuals and bring it in line with EU standards. For software, translation is more expensive. If it costs between $50,000 and $500,000 to translate a single application into a single language, imagine the expense of getting Office 2007 ready for the 25 main European languages. But does this really justify why we pay nearly double the US price for a version of Office 2007 Home and Student Edition in the same language? And why do buyers in Japan pay less for so many software products?

Perhaps it all comes down to what Apple calls "the cost of doing business" and what Microsoft describes as "the cost of marketing in many languages" versus "the scale and volume of the US market". Basically, it's cheaper for technology companies to do business in the US. The market is larger and more homogenous, the distribution is easier and they can rely on a single marketing campaign.

In Europe there are multiple and more diverse markets, distribution is complicated by political boundaries and, while a single campaign will work across several territories within Europe (albeit with some translation), it may not work across all. Still, it's not fair that we pay extra for Vista because Microsoft wants to sell it in Sweden, Serbia and Spain.

The workarounds

So, in many cases it could be worth making your next major technology purchase from abroad. Take advantage of a US business trip or holiday and buy while you're there. Buy whatever you like, try before you buy and, provided you can fit the item your luggage, there will be no shipping charges. All you need worry about is customs.

While it's tempting to skip through the green channel, there are genuine risks at customs. You're allowed to bring goods totalling £145 into the UK without charge. Once you exceed this you're liable for UK tax and duty on the total value of the goods you're bringing in. Fail to declare and there's a chance you could be prosecuted.

Above £145 you have to pay 17.5 percent VAT and, depending on the product, duty as well. Laptops, software and digital stills cameras are duty free, but a camcorder is subject to up to 14 percent duty and an MP3 player, 2 percent. Common rates are listed on below. If you've no plans to visit the States, your next option is to buy online from a US store. It'll quote you a shipping cost and you'll be responsible for VAT and duty when the product arrives.

Duty rates for internet goods

Digital still camera none
Camera lenses 6.7 percent
Webcam 6.9 percent
Laptop none
Handheld computer (PDA) none
Handheld computer with calc functions 3.7 percent
Audio/video/games discs 3.5 percent
CD-ROM containing data or apps none
DVD player/recorder 14 percent
Mobile phone none
Monitor (able to display video) 14 percent
Monitor (PC only) none
MP3 player 3 percent

Legal importing

Call the Customs Tariff helpline on 01702 366 077 and tell them what you've bought before the goods arrive. Using the commodity code they give you, call the Customs National Advice Service on 0845 010 9000 and they'll tell you the duty to be paid. You will either be charged by the shipping company or the Post Office. You must pay these fees and a small handling charge before the product is delivered.

A further option is to buy from eBay.com or another US-based online auction store. We don't recommend this for hardware, but it can be a good way of saving money on software. However, you'll still be liable for VAT should customs intercept the parcel. One way around this is to download the product from a US online store.

Sometimes, the amount you can save is minimal. Buy a Canon EOS 400D digital camera online from B&H Photos in New York and, while the $775 price tag is about £100 less than you'd pay for it over here, add shipping, VAT and handling charges and the saving is quickly absorbed.

That's why buying while in the US is such a good bet. Laptops are hard to purchase online – few retailers ship them internationally. Buy a Lenovo 3000 V100 in a US store and you'll save £200, even once you've paid VAT on your return to the UK.

It's software where you can make a real killing. Buy Adobe Photoshop CS2 from Amazon.com and, even after shipping and import taxes, you'll still pay only $726 (£367). That's more than £200 less than you'd pay at Adobe's UK store. Buy Vista Premium (Upgrade) and Office 2007 Home and Student next time you're in the US and, even with VAT, you'll still have more than £60 to play with.

The caveats

However, buying internationally isn't easy, even once you've found a store that'll ship goods. B&H Photos, Geeks.com and Compuplus.com will, but many won't. Even these won't sell all their products to UK customers. Other stores, such as TigerDirect.com or Directron, will ship goods but only if you contact them first. You may have to pay using a US credit card or via wire transfer.

Consider your options Consider the choice of store carefully. Low prices and a slick site are great, but don't guarantee trustworthiness. Get as much feedback as you can and don't be afraid to ask questions. Finally, be aware of issues that might affect you once your hardware arrives. Does your product need a US power supply? Swapping a standard US power lead for a UK equivalent is no problem, but non-standard, 110V external adaptors are hard to replace. If you buy a PDA or smartphone, is it tied into US GSM 850/1900/CDMAOne systems? And most TVs will display an NTSC video signal, but will a US camcorder work with your PAL equipment?

Watch out for hardware products that work with online services, too. It might seem cool to try and import a Microsoft Zune MP3 player or PS3 now, but will you be tied into US services and therefore unable to use the UK equivalent? Will you be able to use those services without a US credit card? An HD projector for $999 sounds brilliant, but what if the bulb blows and you have to import a replacement?

Some of the best software deals are just out of reach. You can save £256 on Photoshop only if you've got a US credit card registered to a US address. The same is true of Corel and Symantec software.

However, many suppliers of small utilities will sell to you at US prices. And the direct download route is becoming increasingly attractive. Rather than pay £20 for Half-Life 2: Episode One, download it for $20.

You can buy some boxed software from the US, but you'll find the odd package that simply can't be shipped outside the States. Take a look at Amazon's international store for PC software and games. Its range is limited but you can make savings. There's even a smart import tax deposit system – you pay a deposit to cover import costs and Amazon refunds unused funds.

Although language isn't a problem with US software, currencies, weights and paper sizes are all different from ours. And links to online resources may be US-specific. You shouldn't have trouble authenticating a US-bought Microsoft or Adobe product, but you shouldn't bank on this being the case with every title.

The safeguards

Having got your hands on a bargain, you'll want support for it. Many manufacturers now offer support only to paid subscribers or by using premium phonelines. In many cases, the answers to your questions can be found in the form of FAQs on the maker's website or via user forums.

You'll want an international warranty for any hardware you buy. These are by no means a given – on a recent visit to Asia we were offered cover for only Sony, Kodak or Canon goods. Even when sellers claim to sell products with international cover, check whether this is supplied by the manufacturer, the retailer or a third party. Gen up on how any problems that arise will be dealt with, too. The retailer may offer international cover via a third party, but you might have to pay extra for this.

Faulty imports
If there is no formal warranty, check the store's policy should the product be dead on arrival, fail to turn up or develop a fault within a few days. You might find you're on your own, but at least you'll know this before you buy.

Legal safeguards include the Distance Selling Act – useful for goods bought within the EU – and Section 75 of the 1974 Consumer Credit Act. Provided you buy with a credit card and spend £100 to £30,000, your credit card company is equally liable should you have a claim of breach of contract or misrepresentation against a supplier. To pursue a claim you need to write to your credit card company detailing the problem and enclosing any supporting evidence. You can state in the letter that you'll withhold an appropriate sum from your next credit card payment to cover the loss, which you don't expect to be charged interest on. The credit card companies don't like it – in fact they've tried to get Section 75 restricted to UK sales – but after a high court ruling last year they have to lump it. That's good news for you.

So, what are you waiting for?

Buying from the US isn't as easy as buying from the UK, but in many cases the savings make the effort worthwhile. Don't let the manufacturers, customs or concerns about future support put you off. Get on a plane, get on the phone or just get online, and save yourself a packet.

eBay advice

If you've decided to try saving some cash by using eBay, especially hardware, read everything carefully and query as much as possible before you buy. Check for warranty coverage, what happens if the product is dead on arrival and whether cables, accessories and other necessary equipment will be supplied.

With software, you should be cautious about attention-grabbing prices. You'll come across offers such as '$239 for Photoshop CS 2.3', 'under $100 for CorelDraw X3', or '$250 for Office Professional 2003 with a free upgrade to Office 2007'. Not all are legitimate. Look for signs of pirate copies: the words 'no serial number included but instructions will be provided' are a dead giveaway. Bargain-priced academic versions are another issue. They are cheap but may require proof of your academic credentials. Check the licence details before you buy and ensure any certificates of authenticity are provided.

If you are buying second-hand applications, consider the licensing issues. Ensure all the program discs and materials are handed over, that there is a transfer of licence included and that the software developer has been informed. The onus is on the seller to complete the appropriate forms and send them in. If they fail to do so, you could end up with a package that won't authenticate once installed.

Read more: Opinion


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