Government Approach to LVI
Background
Following lobbying from the BRC the Government agreed to review the current system of low value imports and held a consultation which ended in March 2026. Currently, goods with a value of £135 or less imported into the UK are not subject to tariffs and full customs procedures.
The Government released a key part of its response earlier this year, bringing forward the date at which it would implement changes to the system to October 2028 at the latest, six months earlier than proposed; an improvement but not quickly enough in our opinion. It has now released full proposals on how it will change the system. Below is commentary on the key issues.
Scope
The Government has confirmed the scope of the new regulation by confirming it will exclude
- · Goods valued over £135
- · Goods subject to non-ad valorem tariff rates
- · Goods subject to restriction on import imposed under an enactment such as the requirement for a licence
- · Goods subject to excise duty
- · Goods subject to trade defence measures
The Government had considered whether the system should be voluntary for some importers using LVI, including smaller businesses, who raised issues around consumer choice and value. However, it has agreed the new legislation should be mandatory for all importers. It did however, recognise there should be a limit for personal imports of less than £39, products sent by friends and relatives abroad.
New Customs Arrangements
Importing businesses will be able to pay customs duties quarterly, with an option to align payments with VAT returns. Those businesses responsible will be direct sellers and OMPs facilitating sales. Where these businesses do not have a UK presence they will have to appoint a fiscal representative in the country to ensure compliance with the legislation. They will also be responsible for supplying item level data to HMRC, although the full details of the data requirements are yet to be confirmed.
Tariffs
The Government had considered a simplified approach to tariffs; grouping similar goods together and applying a group tariff than the applicable specific UK tariff. It thought this might reduce the burden on importing businesses. However, it has decided against that approach and all imported goods will need to pay the appropriate tariff, which it believes is both fair, consistent and deliverable.
Additional Fees on LVIs
The Government considered whether an additional fee was appropriate, to cover the increased administration and scrutiny of LVIs. The EU introduced a €3 per item charge this month. The UK fee would be charged as well as the tariff and VAT. It has not confirmed either the level of the fee or how it will be applied and will consider responses to the consultation before publishing further details. However, it has indicated all changes to LVI including the administration fee will be introduced at the same time, not in advance as with the EU charge.
VAT
The Government considered how VAT should be treated and collected in the consultation. It has not confirmed its approach in this response but said it will continue to work on this as part of the delivery of the LVI changes. In particular, it is considering how VAT collection can align with customs duties and whether VAT should be collected at the point of sale.
Next Steps
The Government has published draft Primary Legislation as part of the Finance Bill, which will be introduced to Parliament in the Autumn. This sets out the broad scope and approach of the changes to LVI. Further detailed implementation, including issues such as the approach to administrative fees and VAT, as well as the implementation date will be set out in Secondary Legislation once the primary powers are in place.
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