HMRC has published its response to the consultation on reforming the customs treatment of Low Value Imports (LVIs), confirming that new rules will take effect from October 2028 at the latest.
The changes will remove the current customs duty relief for most consignments valued at £135 or less and introduce a dedicated customs process for these goods.
The reform is aimed at modernising the way low value parcels are brought into the UK, particularly those sold directly to consumers by overseas sellers and online marketplaces. It follows significant growth in cross-border e-commerce and is intended to ensure that customs duty is collected more consistently, while retaining a simplified process for high-volume, low-value consignments.
Under the new arrangements, LVI rules will apply to all consignments with a consignment value below £135. Goods above that threshold will continue to be subject to normal customs declarations. However, for consignments valued at £135 or less, businesses will not be able to opt into the standard declaration process . HMRC has confirmed that LVI declarations will use a separate, reduced data set, although some detailed requirements, including item-level data, will be confirmed later.
Each consignment will also need a unique reference number, which will be used to clear goods through inventory-linked systems or the Goods Vehicle Movement Service. Safety and Security Declaration data will not be required through the LVI arrangements at implementation, but this is expected to be introduced at a later stage.
A key change for overseas sellers is the requirement to appoint a fiscal representative established in the UK. That representative must have a permanent UK place of business where business activities are carried out and will be jointly and severally liable for customs duty debts. This is likely to be a significant compliance consideration for overseas businesses selling goods directly to UK customers. It is also likely that such representatives will be few and far between due to the joint and several liability issue. Those businesses that are prepared to offer this service are likely to charge a premium because of the risk to their own business if a seller fails to pay duties.
Sellers and online marketplaces will be responsible for paying customs duty on sales made through them, with payment expected to be made quarterly. This will require businesses and platforms to have systems capable of capturing the correct data, calculating duty accurately and maintaining records to support quarterly reporting and payment.
Not all goods will fall within the new LVI regime. Goods subject to excise duty, import restrictions such as licensing requirements, trade defence measures such as anti-dumping duty, or customs reliefs including Temporary Admission, Inward or Outward Processing and customs warehousing will be excluded, regardless of value. Those goods will remain subject to the normal customs process.
The reforms will also not apply to movements from Great Britain to Northern Ireland covered by the Windsor Framework. Consumer-to-consumer parcels are treated differently too: parcels sent from one consumer to another will not be affected where the value is £39 or less. Consignments above £39 will be subject to normal customs declarations.
One notable decision is that the government will not introduce the simplified tariff model proposed in the consultation, which would have grouped goods into broad duty “buckets”. Instead, classification will remain aligned with the existing UK tariff. This means sellers, marketplaces and their advisers will still need to understand commodity codes and tariff treatment, even though the customs process itself will be tailored for LVIs.
HMRC has also confirmed that an additional fee will be introduced for LVIs, although further detail is expected. The government is also considering changes to VAT collection so that VAT may be brought more closely into line with customs processes. At present, VAT on many low value imports is collected at the point of sale, so this is an important area for businesses to monitor.
Although implementation is more than two years away, affected businesses should not wait. Overseas sellers, online marketplaces, parcel operators and customs intermediaries should begin assessing their data, systems, contractual arrangements and UK representation requirements now. The reforms will change who is responsible for duty, how it is reported and how low value goods are cleared into the UK.
If you have any questions or concerns about how the LVI reforms could affect your business, please get in touch with our team.
