At the Autumn Budget 2025, the government announced that it intends to remove the current LVI relief - and make LVIs subject to tariffs - from March 2029 at the latest. At the same time, it launched a consultation on how it intends to reform the LVI customs arrangements to account for the removal of the LVI relief.
What are LVIs?
LVIs are individual consignments of goods sent from a country or territory outside of the UK to one or more recipients in the UK with a declared value of £135 or less. Importers of LVIs are eligible for a relief (LVI relief) which allows the goods to be imported into the UK without paying customs duty.
The case for reform
The government says that it is taking action “in response to the increasing popularity of sellers and online marketplaces selling LVIs into the UK and evidence that some goods are not compliant with existing legislation”. Removing LVI relief “is a crucial step in supporting fair competition between high street and online retailers”, says the government.
ICAEW’s view
In its response to the consultation (to be published on ICAEW’s tax representations webpage shortly), ICAEW has welcomed the government’s decision to remove LVI relief as a move that is both necessary and overdue. However, ICAEW cautions that the measure will only achieve its intended effect if the new arrangements are well-designed and implemented properly. ICAEW’s response identifies the key risks in the current proposals and sets out practical recommendations to address them.
Timeline for implementation
ICAEW’s main concern is that, given the European Union’s (EU) plans in this area, the government’s proposed implementation timeline creates a significant regulatory gap. The EU will introduce a flat rate duty of €3 from 1 July 2026 and remove its own €150 threshold from mid-2028. ICAEW is concerned that this creates a real and imminent risk of the UK becoming a destination of choice for undervalued or non-compliant e-commerce parcels displaced from the EU market.
Other recommendations
Other recommendations made by ICAEW include that the government:
- prioritises simplicity when designing the system;
- reconsiders the fiscal representative model;
- moves away from the costly interim tariff bucket system in favour of a simple transitional flat-rate duty that could realistically enable a launch by late 2027;
- considers making handling fees cost-reflective and levied per consignment; and
- allows businesses to calculate, report, and remit both VAT and Customs Duty for low-value imports through a single, unified digital return.
Prepare for 2026/27 series
ICAEW's Tax Faculty looks at the key tax changes applying from April 2026.
Latest on business tax
The Tax Faculty
ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
Further resources
Latest news
TAXwire and Tax Track
Stay up to date with the latest developments by signing up to the Tax Faculty's weekly enewsletter and listening to the Tax Track podcast series.
Listen now Newsletter sign upPractical guidance
Tax Faculty resources
The Tax Faculty offers expert guidance and support enabling you to provide the best advice on tax legislation to your clients or business. We offer clear direction in taxing times. Membership is open to everyone.
ICAEW support
Training and events
Browse upcoming and on-demand ICAEW events and webinars focused on developments in tax practice and policy.
Events and webinars CPD courses and more