New HMRC rates for air freight, groupage, and full container loads could affect how UK importers calculate import VAT and prepare customs declarations.
For UK importers, the cost of bringing goods into the country extends beyond the price paid to the overseas supplier.
Freight charges, handling costs, customs clearance fees, and other expenses can influence the value used to calculate import VAT. Understanding which costs must be included is essential for preparing accurate customs declarations and managing import expenses.
On 21 October 2026, HM Revenue & Customs (HMRC) updated its guidance on calculating the VAT value of imported goods, introducing revised nationally agreed rates under Method 2 of the Valuation for VAT Addition (VVA) arrangements.
The changes represent the first increase to these nationally agreed rates in decades and affect businesses using this simplified method to estimate incidental expenses associated with imported goods.
For freight forwarders, customs brokers, and importers, the update is an important reminder to review existing valuation procedures and ensure the correct amounts are included in customs declarations.
What has HMRC Changed in Import VAT Valuation?
Import VAT is calculated using a value that may be higher than the customs value of the imported goods.
Under HMRC rules, businesses must begin with the customs value used for duty purposes and add certain expenses and applicable duties to determine the value for import VAT.
These additions can include transport, insurance, handling, storage, customs clearance charges, and other incidental expenses incurred up to the relevant UK destination.
When the actual incidental expenses are not used, HMRC provides simplified arrangements for calculating the amount to be added.
Method 2 allows eligible importers to use nationally agreed rates instead of calculating individual incidental expenses for each consignment.
The October 2026 update revises these rates across three freight categories: air freight, groupage and consolidated freight, and full container or trailer loads.
Businesses using Method 2 should review their current calculations to ensure the revised rates are reflected in their customs processes.
New HMRC Method 2 Rates Effective from the October 2026 Guidance Update
The revised rates depend on the type of freight movement and how the goods are transported.
| Freight Category | Updated Method 2 Rate |
| Air Freight – Group A | £0.55 per chargeable kilogram, subject to a minimum addition of £135 per consignment |
| Groupage and Consolidated Freight – Group B | £125 per gross weight tonne for delivery and handling, plus £110 per consignment for other ancillary expenses, with a minimum total addition of £235 |
| Full Container and Trailer Loads – Group C | £760 per full-load consignment |
These rates represent estimated UK incidental expenses and are used to determine the amount added to the customs value for import VAT purposes.
They are not additional customs duties or a new VAT rate.
Instead, they affect the taxable value on which import VAT is calculated.
Air Freight: 55p per Chargeable Kilogram
For air freight consignments, the updated rate is 55p per chargeable kilogram, with a minimum addition of £135 per consignment.
Importers must use whichever amount is greater.
For example, an air freight consignment with a chargeable weight of 400 kg would produce an addition of £220.
However, a smaller consignment of 100 chargeable kilograms would produce only £55 using the weight-based calculation. Because this is below the minimum, the required addition would be £135.
This makes the minimum particularly relevant for businesses importing smaller air freight consignments.
Groupage and Consolidated Freight: Weight-Based and Fixed Additions
For groupage or consolidated consignments transported by trailer, rail wagon, or container, HMRC requires two components.
The first is £125 per gross weight tonne for delivery and handling.
The second is a fixed £110 per consignment for other ancillary expenses.
Together, these produce a minimum addition of £235.
For example, a groupage shipment weighing two gross tonnes would have a calculated addition of £360:
£250 for delivery and handling, plus £110 for other ancillary expenses.
Businesses handling regular LCL or consolidated imports should review how these additions are calculated and applied to eligible consignments.
Full Container and Trailer Loads: £760 per Consignment
For full-load consignments transported by container, trailer, or rail wagon, HMRC has introduced a nationally agreed rate of £760 per full-load consignment.
Unlike groupage shipments, this rate is applied per full-load consignment rather than calculated using the shipment’s weight.
For importers moving full container loads into the UK, the updated amount can influence the VAT value declared for each eligible shipment.
When can Importers Use Method 2?
The revised rates do not automatically apply to every UK import.
HMRC provides three methods for determining the incidental expenses included in the import VAT value.
Method 1 uses the actual costs incurred. Businesses declare these costs at importation and may need to submit post-clearance amendments if the figures are later found to be incorrect.
Method 2 uses the nationally agreed rates to estimate incidental expenses. It can be used when the goods are moved internationally, and the movement terminates in the UK.
Importantly, HMRC states that these rates can only be used for UK incidental expenses where freight costs to the UK border have already been separately identified.
Method 3 allows an individual agreement to be negotiated with HMRC where the other methods are considered inappropriate or impractical.
Businesses can choose the method that best suits their circumstances, provided they meet the relevant requirements.
The October update specifically changes the nationally agreed rates used under Method 2.
HMRC also explains that when Method 2 rates are used correctly, post-entry amendments for these estimated incidental expenses are not required.
How could the Updated Rates Affect UK Importers?
The main consideration is the effect on the value used to calculate import VAT.
For businesses using Method 2, higher nationally agreed additions may increase the amount of import VAT calculated on eligible customs entries.
The actual financial impact will depend on the freight category, shipment characteristics, applicable VAT rate, and the importer’s VAT recovery position.
For example, an importer handling frequent air freight shipments may need to review how chargeable weight and minimum additions are applied.
A business importing consolidated cargo may need to ensure both the weight-based delivery and handling charge and the fixed ancillary amount are included.
Similarly, full-load importers should check whether the revised £760 addition is being applied correctly to eligible consignments.
The changes may also affect import cost estimates, cash-flow planning, and the information shared between importers, freight forwarders, and customs brokers.
For businesses entitled to recover import VAT, the ultimate tax cost may differ from the amount initially accounted for. However, accurate valuation and declaration remain essential regardless of the recovery position.
Why Customs Declaration Accuracy Matters?
The updated rates highlight the importance of maintaining accurate customs valuation procedures.
Import VAT calculations depend on several pieces of information, including the customs value, freight arrangements, destination, applicable duties, and incidental expenses.
If these details are incomplete or incorrectly applied, the declared VAT value may not reflect HMRC requirements.
For freight forwarders and customs brokers handling UK imports, reviewing the revised rates is an opportunity to check how customs information is collected, calculated, and entered into declaration systems.
Businesses should pay particular attention to whether they use actual costs or simplified arrangements, whether freight to the UK border is separately identified, and whether the correct freight category has been selected.
They should also ensure that employees responsible for preparing customs entries understand the updated Method 2 requirements.
A consistent valuation process helps reduce avoidable declaration errors and supports stronger customs compliance.
What does this Mean for CargoWise Users?
For logistics businesses managing UK customs declarations through CargoWise, changes to HMRC valuation guidance may require a review of existing customs configurations and operational procedures.
The important question is whether the business’s current declaration process correctly reflects the valuation method it uses.
This may involve reviewing how incidental expenses are recorded, how relevant amounts are calculated, and how information flows between shipment records and customs declarations.
Businesses should also check whether any existing templates, calculation procedures, or automated workflows rely on the previous Method 2 rates.
Where updates are required, they should be assessed and tested against the applicable HMRC guidance before being used in live customs processing.
As a CargoWise Service Partner with Gold Customs competency, Elicit Technology supports freight forwarders and customs brokers with CargoWise customs configurations, declaration workflows, integrations, and operational improvements.
Our team combines CargoWise expertise with practical knowledge of customs processes to help businesses review their existing environments and address changing operational requirements.
Conclusion: Review Your UK Import VAT Valuation Process
HMRC’s October 2026 update introduces revised nationally agreed rates for estimating incidental expenses under Method 2.
With new additions of 55p per chargeable kilogram for air freight, £125 per gross weight tonne plus £110 for groupage, and £760 for full-load consignments, eligible UK importers should ensure their valuation procedures reflect the latest guidance.
The update does not change the underlying VAT rate, but it can affect the value on which import VAT is calculated.
For importers, customs brokers, and freight forwarders, the priority is understanding when the revised rates apply and ensuring customs declarations are prepared using the appropriate valuation method.
Need support reviewing your CargoWise customs workflows following the HMRC update?
Elicit Technology helps logistics businesses strengthen their CargoWise customs configurations, improve declaration processes, and adapt operational workflows to changing requirements.
Connect with our team to discuss how your CargoWise environment can better support accurate and efficient customs operations.
Official Source: HMRC – Working out the VAT value using the customs value of imported goods
Source: HM Revenue & Customs guidance, last updated 21 October 2026.
