Here's a quick summary of duty/vat import to the UK :
All charges are on the combined goods+shipping except in one case (noted below).
*You don't pay any duty if the duty would come
less than £9 (same when travelling) which with a typical 7% duty rate is approx £135 maximum, including shipping of course. But you still pay VAT.
*HMRC confuse the issue but saying "some items of £135 or less won't be charged duty" but actually it's just the £9 rule and depends on the duty rate.
* But you will be charged VAT + handling (postoffice £8, parcel force £13.50 express service else £8)
*Goods less than £18 (
excluding shipping): no VAT or duty or handling fee (which is how 7dayshop do it, but government seeking to reduce this to £15).
(*when travelling but not shipping : flat rate of duty at 2.5% until £270 -or a little higher for some items- after which normal duty rates according to product type apply. If it comes to less than £9 you don't pay duty.)
So a £120 item + £14 shipping there's probably no duty only VAT, so:
134*vat+handling =
134 * 1.20 + 8 = 168 = 26% increase, as kully said.
That percentage goes up on lower value items because that £8 handling fee becomes more significant.
But if the item is over £135 with duty of 7% (duty rates are typically between 5-9%) :
135 x1.07 *1.2 +8 = 181 = 34% increase
That's suddenly an extra £13 for going £1 over £134. (But check exact values for duty as i am using approximates).
This is all done on the total package not the individual items. So you may want to split an order if the extra shipping comes to less than £13 (unlikely).
With the economic slow-down customs have have a higher tendency to process your item so it's best to incorporate all this in to your calculations and treat an item that slips though as a bonus. I don't know what the rate of slip-through is and some people are reporting no slip-throughs, so probably there's no point in trying to factor this in.
You have to ring an 0845 number to find out the actual duty rate. Some independent websites may provide rates but I haven't looked in to it.
References :
http://www.hmrc.gov.uk/customs/arriving/arrivingnoneu.htm#4
http://www.dhl.co.uk/en/express/shipping/customs_support/duties_taxes.html
http://www.parcelforce.com/portal/pw/content1?mediaId=load105042&catId=4800016
http://www.hmrc.gov.uk/customs/tax-and-duty.htm#1