Autumn Budget 2025 – Key Customs & Excise Measures
The Autumn Budget presented today by UK Chancellor Rachel Reeves contained several measures relevant to importers and businesses dealing with goods subject to indirect tax—including customs duty, excise duty and VAT.
As expected, the Budget delivered no major surprises in the customs and excise space, but it did confirm a number of policy shifts that will impact supply chains over the coming years.
Below is a summary of the principal announcements and what they may mean for affected businesses.
1. Abolition of Low Value Consignment Relief (LVCR)
One of the most significant changes is the proposed abolition of LVCR, which currently exempts goods valued below £125 from customs duty.
This reform has been widely trailed and mirrors similar actions in the EU and US, where governments have sought to address competitive imbalances between UK-based online retailers and ultra-low-cost online marketplaces such as Shein and Temu.
Key implications:
Imports in consignments below £125 may now attract customs duty.
Sectors such as clothing and footwear are expected to feel the greatest impact.
Businesses using low-value bulk shipments or dropshipping models should reassess landed costs and pricing strategies.
2. Alcohol Duty Increase (from 1 February 2026)
Alcohol excise duties will rise in line with the Retail Price Index (RPI) from February 2026.
For manufacturers, importers, and bonded warehouse operators, this continues the trend of inflation-linked uprating rather than policy-driven increases.
3. Tobacco Duty Increase: RPI + 2% (from 1 February 2026)
Tobacco Products Duty will rise by RPI plus an additional 2%, continuing the government’s long-standing approach of using taxation to influence public health outcomes.
Importers and logistics providers should prepare for updated rate structures and potential shifts in consumer behaviour.
4. New Excise Duty on Vaping Liquids (from 1 October 2026)
The Budget confirms the introduction of a new excise tax on vaping liquids, set at:
£2.20 per 10ml
This measure was widely expected and aligns the UK with an emerging international trend to tax vaping products more explicitly. Businesses importing or manufacturing e-liquids should begin modelling the cost impact well ahead of the 2026 start date.
5. Extension of the Soft Drinks Industry Levy (“Sugar Tax”) (from 1 January 2028)
The government will extend the existing Soft Drinks Industry Levy to cover drinks containing milk, which had previously been exempt.
The confirmed rates remain:
19.4p per 100ml for drinks containing 5g+ sugar
25.9p per 100ml for drinks containing 8g+ sugar
This represents a significant shift for producers and importers of milk-based beverages, ready-to-drink coffees, energy drinks with dairy components, and other similar products. Reformulation strategies may become more common as the deadline approaches.
6. Fuel Duty Freeze Extended to September 2026
The government will maintain the current freeze on fuel duty until at least September 2026. This measure offers some continued cost stability to logistics companies, carriers, and businesses reliant on road transport.
What Should Businesses Do Next?
Businesses involved in importing goods, managing excise warehouses, or selling products affected by the new indirect tax measures should begin planning early. Key actions include:
Reviewing tariff classifications for low-value imports
Modelling duty cost increases for alcohol, tobacco, vaping liquids and high-sugar drinks
Updating supply chain and pricing strategies to accommodate new taxes
Assessing compliance implications, particularly where new excise regimes apply