Valuing imported goods using Method 1 (transaction value)
Source: gov.uk (2025-06-24)

How to use Method 1 to work out the customs value of your imported goods if you're an importer or clearing agent.

Valuing goods can be complicated, so if you’re not an importer or clearing agent you may want to get someone to deal with customs for you (https://www.gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf).

Before you try Method 1 you must first have read prepare to work out the customs value of your imported goods (https://www.gov.uk/guidance/prepare-to-work-out-the-customs-value-of-your-imported-goods).

Transaction value

This is the price paid or payable by the buyer to the seller for the goods when they are sold for export to the UK. This must be the last sale for export to the UK. Follow this guidance to find out what to include and exclude from the customs value.

When you cannot use Method 1

Where there’s no sale

You cannot use valuation Method 1 if there’s no sale. You must try Method 2 (transaction value of identical goods) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-2-transaction-value-of-identical-goods).

Examples of where there’s no sale:
- free consignments such as gifts, samples or promotion items — because these transactions do not involve the payment of a price, they cannot be regarded as sales
- goods imported on consignment — these are goods sent to you so that you can sell them for the supplier — at the time of discharge from the free circulation procedure, no sale would have taken place
- goods imported by intermediaries who do not purchase the goods and sell them after discharge from the free circulation procedure — this covers a whole range of situations where goods are delivered to intermediaries without a sale taking place
- goods imported by branch offices which are not separate legal entities — these cannot be regarded as sales because a sale is a transaction between 2 separate legal entities (find more information about branch offices or inter-company transfer (https://www.gov.uk/guidance/valuing-imported-goods-if-there-are-branch-offices-or-inter-company-transfers-and-accounting))
- goods imported under a hire or leasing contract — these transactions are not sales even if the contract includes an option to purchase the goods
- goods, often machinery, supplied on loan which remain the property of the sender
- goods (waste or scrap) imported for destruction in the UK and where the sender pays you for your services — as you’re not paying for the imported goods, no sale has taken place
Conditions for using Method 1

No restrictions on the buyer’s disposal or use of the goods

There must be no restrictions on the buyer’s disposal or use of the goods except for those which:
- are imposed or required by law or by the public authorities in the UK
- limit the geographical area where the goods can be resold
- do not substantially affect the value of the goods
Examples of restrictions which can be ignored when deciding if you can use Method 1:
- an official licence is needed to trade in the imported goods
- the goods can be sold only in the UK
- the goods cannot be sold before a certain date, for example, cars which cannot be sold before the start of the model year
If there are any other restrictions on the buyer’s disposal or use of the goods then you cannot use Method 1. You must try Method 2 (transaction value of identical goods).

Sale or price conditions

The sale or price must not be dependent on conditions or considerations where you cannot work out their value in relation to the goods being valued.

If you can work out their value, you can use Method 1, you must add that value to the price paid or payable as an indirect payment by you to the seller.

Examples of conditions or considerations where you cannot determine the value:
- the seller fixes the price of the imported goods on condition that you buy other goods in specified quantities
- the price you pay for the imported goods depends upon the price you charge the seller for other goods
- the price you pay for the imported goods depends upon an agreement you make with the seller — for example, you import semi-finished goods on the understanding that you’ll send a specified quantity of the finished goods to the seller
If the sale is dependent on conditions or considerations where you cannot work out their value, then you cannot use Method 1. You must try Method 2 (transaction value of identical goods).

You do not have to take into account conditions or considerations relating to the production or marketing of the imported goods. For example, if you provide the seller with engineering and plans undertaken in the UK, this does not prevent you using Method 1.

Where the seller benefits

You must be able to make an appropriate addition to take account of if the seller receives (directly or indirectly) part of the proceeds of any subsequent resale, disposal or use of the imported goods.

Find more information about this in sections ‘Items you must add to the price paid or payable’ and ‘What to do if you do not know the value of the items at the time of entry’.

If you cannot make an appropriate addition, Method 1 cannot be used. You must try Method 2 (transaction value of identical goods).

Proving your goods were sold for export to the UK

You need to show that the goods are or were one of the following:
- manufactured to UK specifications
- identified as having no other use or destination, for example by marks on them
- manufactured or produced specifically for a buyer in the UK
- ordered from an intermediary who sources them from a manufacturer who then ships the goods direct to the UK
What to base the customs value on

You base the customs value on the total payment made, or to be made, for the imported goods.

This means payments made:
- from the buyer to the seller
- for the benefit of the seller
You need to include payments made, or to be made, as a condition of sale by the:
- buyer to the seller
- buyer to a third party to satisfy an obligation of the seller
Condition of sale payments include periodic payments from the buyer to the seller. These could be for tooling charges, engineering fees, or development costs.

You need to take into account payments from the buyer to the seller that are:
- monthly, quarterly or annual payments
- one off payments
As a buyer importing goods, you do not always need to be established in the country of importation (https://www.gov.uk/guidance/check-if-youre-established-in-the-uk-or-eu-for-customs).

Examples of which sale value to use

If the last sale is before the goods are exported to the UK

Companies A and B are both based in a third country.

Company A sells the goods to company B for £1,000.

Company B then sells these goods for £1,200 to Company C that is based in the UK. The goods are imported into the UK.

The £1,200 transaction between company B and company C is a sale for export to the UK. This is because it resulted in the goods being exported to the UK and it was the last sale before the goods were brought into the UK. This is the sale to use under Method 1.

The first transaction for £1,000 cannot be used. This is because it’s not the last sale before the goods were imported into the UK. Also, it cannot be demonstrated that it was a sale for export to the UK.

If there’s a sale during the journey

Company A is based in a third country and company B is based in the UK.

Company A sells the goods to company B. While the goods are being shipped, company B then sells the goods to company C before the goods arrive in the UK.

The sale from company A to company B is a sale for export but it’s not the last sale before the goods were brought into the UK. The sale from company B to company C is the last sale for export to the UK. This is the sale to use under Method 1.

If there’s a sale to the importer after the goods have arrived in the UK

Company A sells the goods to company B.

Company B then sells the goods to company C before the goods arrive in the UK. After the goods arrive in the UK, company C sells the goods to company D which is the importer.

The sale immediately before the goods were brought into the UK is the sale between B and C. This is the sale for export to the UK. This is the sale to use under Method 1.

You can only use Method 1 in this situation if the importer (company D) can get the invoice for the sale between companies B and C.

If the importer cannot get this invoice, you cannot use Method 1 and must consider Method 2 (transaction value of identical goods) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-2-transaction-value-of-identical-goods).

If the buyer and seller are related for valuation purposes

This section assumes you’re the buyer of the goods. If you’re related to the seller, the price paid or payable can be accepted under Method 1 if you can show that the relationship has not affected the price.

Working out if you’re related to the seller

Persons A and B are related persons for the purposes of valuing chargeable goods in cases where:
- B is a body corporate, and A is an officer of B
- A and B are partners in the same business
- A is an employee of B
- the same person controls a business carried on by A and a business carried on by B
- A controls a business carried on by B
- A and B jointly control the business of another person
- A is a member of the same family as B — this means where a relationship exists directly or indirectly between A and B which arises through blood, adoption, marriage, civil partnership or co-habitation
What ‘control’ and ‘business’ mean in these cases:
- a person controls a business carried on by another person where the latter is accustomed to conduct the business in accordance with the directions of the former
- a person also controls a business carried on by another person where the control is exercised through a third person who acts on that person’s direction
- where a business is carried on by a company, a person controls that business where that person holds 5% or more of the voting rights in the company
- a business referred to is not limited to a business involved in the importation of the chargeable goods presented to customs
If you act as the seller’s agent, distributor or concessionaire you’re related only if one of the ‘persons A and B’ categories also apply.

Providing evidence of the price paid or payable

Use the seller’s invoice or whatever document they use to ask for payment as evidence, providing that:
- there can be no doubt about the document’s authenticity
- it carries enough information to show that the transaction value declared is the total amount paid or payable
When customs authorities question the declared transaction value

If customs authorities suspect that the declaration transaction value does not represent the total amount paid or payable, we’ll follow this process.
- We’ll ask you for more information and review it.
- If we still have doubts, we’ll tell you why, in writing if you asked for it.
- We’ll give you reasonable time to respond.
- We’ll then make a final decision and tell you in writing.
- tell us within 30 days of the date of our letter
- explain why you disagree
Check disagree with a tax decision (https://www.gov.uk/tax-appeals/decision).

Items you must add to the price paid or payable

You must add to the price you pay (unless they are already included).

Delivery costs

The costs of transport, insurance, loading or handling connected with delivering the goods to the UK border must be included.

For more information check delivery costs to include in the customs value (https://www.gov.uk/guidance/delivery-costs-to-include-in-the-customs-value).

Containers and packing

You must include the cost of:
- containers which are treated for customs purposes as being one with the goods being valued (that is not freight containers where their hire-cost forms part of the transport costs)
- packing whether for labour or materials
If containers are for repeated use, for example, reusable bottles, you can spread their cost over the expected number of imports.

If a number of the containers may not be re-exported, this must be allowed for.

Selling commission

Payments of selling commission and brokerage must be included.

For more information check how to calculate the customs value if you’re a selling agent (https://www.gov.uk/guidance/how-to-calculate-the-customs-value-if-youre-a-selling-agent).

Royalties and licence fees

You must include these payments when they:
- relate to the imported goods
- are paid by you
- are a condition of the sale to you of the imported goods
You can find further information in how to include royalties and licence fees in the customs value (https://www.gov.uk/guidance/how-to-include-royalties-and-licence-fees-in-the-customs-value).

Goods and services provided free of charge or at a reduced cost by the buyer

If you provide, directly or indirectly, you must include in the customs value any part of the cost or value not included in the price charged to you by the seller:
- materials, components, parts and similar items incorporated in the imported goods including price tags, kimball tags, labels
- tools, dies, moulds and similar items used in producing the imported goods, for example, tooling charges — there are various ways of apportioning these charges
- materials used up in the manufacture of the imported goods but that are not incorporated in them, for example, abrasives, lubricants, catalysts and reagents
- engineering, development, artwork, design work and plans and sketches carried out outside the UK and necessary for producing the imported goods — the cost of research and preliminary design sketches is not to be included
If you make any payments (periodically or ‘one off’) to the seller for any of these goods and services, you must include the amounts in the customs value.

Importing goods from a processor

If you import goods from a processor, you must add these amounts to the transaction value:
- the cost of processing
- goods or services provided free of charge or at reduced cost by the buyer
These goods or services are often called ‘assists’.

Proceeds of resale

If you share with the seller (directly or indirectly) the profit on resale, use or disposal of the imported goods, you must add the seller’s share to the price paid.

For example, if the seller is to have 30% of the profit which you receive, this is to be added to the price paid or payable. If at the time of importation, the amount of profit is not known, you must request release of the goods against a deposit or guarantee.

Find more information on asking for release of your goods against a deposit or guarantee in ‘What to do if you cannot work out the value for customs duty’ in prepare to work out the customs value of your imported goods (https://www.gov.uk/guidance/prepare-to-work-out-the-customs-value-of-your-imported-goods).

You do not have to add dividend payments you make to the seller to the price paid. These dividend payments are not included for the customs value.

Export duty and taxes paid in the country of origin or export

When these taxes are incurred by the buyer, they are liable to duty. If you benefit from tax relief or repayment of these taxes, you may leave them out of the customs value.

Items you may leave out of the customs value

These items may be left out when you’re working out the customs value of your goods.

Delivery costs in the UK

If the seller’s or carrier’s charge covers delivery beyond the UK border, you may deduct the additional delivery charges, providing they are shown separately from the price paid or payable for the goods.

Find more information in delivery costs to include in the customs value (https://www.gov.uk/guidance/delivery-costs-to-include-in-the-customs-value).

UK duties or taxes

You can deduct from the price you pay any included Customs Duty or other taxes which are payable in the UK because of the importation or sale of the goods. The included duty must be the last item you deduct from the price.

To find the amount of duty included in the invoice price, use the formula:

Duty inclusive invoice price multiplied by the duty rate divided by (100 plus the duty rate).

For example, if the duty inclusive invoice price is £1,100 and the rate of duty is 10%, the duty included in that invoice price is worked out by:
- Multiplying £1,100 by 10 then dividing it by (100 plus 10).
- This gives you £11,000 divided by 110.
- This equals £100.
The included duty in this case is £100.

Discounts

These can only be left out if they relate to the imported goods being valued and there’s a valid contractual entitlement to the discount at the actual time for valuation. Discounts (such as contingency or retroactive discounts) related to previous importations cannot be claimed in full on the current importation.

Quantity or trade discounts

You can leave out these discounts if earned. In other words, the price paid or payable net of these discounts is acceptable.

If you’re related to the seller the discounts will also be allowed if that relationship has not affected the price of the goods.

Find more information in ‘Buyer and seller related — general information’.

Cash and early settlement discounts

You can leave out these discounts on the basis:
- when the payment reflecting the discount has been made at the time of discharge from the free circulation procedure
- if the payment has not been made at the time of discharge from the free circulation procedure, it will be allowed at the level declared provided it is a discount generally accepted in the trade sector concerned
- the goods are actually sold at the price declared as the price actually paid or payable
- the discount is still available at the time of discharge from the free circulation procedure
You may be able to include the discount in the customs value at the time of discharge from the free circulation procedure if both of these conditions apply:
- you never take advantage of a cash discount
- you always pay the gross contract price for the goods
For further general information on valuation contact imports and exports general enquiries (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/customs-international-trade-and-excise-enquiries).

Dividends

You can leave out dividend payments you make to the seller.

Marketing activities related to the imported goods

You may leave out from the customs value the cost of activities which you carry out at your own expense:
- advertising
- promotion
- guarantee or warranty services
You should not include any payments that you make towards general marketing support which are not related to imported goods.

The cost of marketing activities borne by the seller are to be included in the customs value even if they are charged separately from the invoice price for the goods.

Buying commission

You may leave out buying commission or brokerage fees paid to your agent for representing you outside the UK in buying imported goods, providing the commission is shown separately from the price paid or payable for the goods.

Find more information in accounting for buying commission in the customs value (https://www.gov.uk/guidance/accounting-for-buying-commission-in-the-customs-value).

Buying commission can be included in the value for VAT but only if the buyer, in the sale on which the customs value is based, is not registered for UK VAT.

Find more information in working out the VAT value using the customs value of the imported goods (https://www.gov.uk/guidance/working-out-the-vat-value-using-the-customs-value-of-the-imported-goods).

Interest charges

These may be left out if they are payable under a financing arrangement for buying the imported goods, providing the charges are shown separately from the price paid or payable for the goods.

Find more information in excluding interest charges from the customs value (https://www.gov.uk/guidance/excluding-interest-charges-from-the-customs-value).

Rights of reproduction

Payments for these rights may be left out if they are shown separately from the price paid or payable for the goods.

Post-importation work for goods such as industrial plant, machinery or heavy equipment

You may leave out charges for:
- construction work
- erecting
- assembling
- maintaining
- giving technical help
The work may be carried out before or after importation so long as it relates to the imported goods and the charge is shown separately from the price paid or payable for the goods.

Management fees

You can leave out management fees that you pay to the seller. This includes general service fees for administration, marketing, accounting, and so on, that are not related to the imported goods.

You may need to produce evidence to support any claim to leave any of these items out of the customs value.

When you can ask for a valuation simplification

If, at the time of entry, the value of items that should be added or excluded from the price payable is not established, you can ask us to agree to a valuation simplification procedure for establishing an appropriate amount to add or exclude at the time of entry. This could involve the use of average values or a percentage addition or deduction and be subject to periodic reviews.

A retrospective price adjustment would not meet the criteria for a valuation simplification. Retrospective price adjustments are where the price that you pay to the seller for your imported goods is revised or re-negotiated after the goods enter free circulation.

Email your request, saying why you need to use a valuation simplification procedure together with details of how the amounts will be determined to xxx@xxx.xx (mailto:xxx@xxx.xx).

This email address is for valuation simplification requests only.

For general enquiries on valuation contact imports and exports general enquiries (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/customs-international-trade-and-excise-enquiries).

If you’re a Large Business trader, you should send your request to the Customer Compliance Manager (CCM), and not to HMRC Customs and International Trade Valuation Unit of Expertise.

Buyer and seller related — general information

This section assumes that you’re the buyer of the goods.

If you’re related to the seller as explained in the ‘Where the buyer and seller are related for valuation purposes’ section, the price paid or payable can be accepted under Method 1 if you can show that the relationship has not affected the price.

One way you can do this is by applying the ‘tests’ for comparison purposes.

You need to show that the price you paid to the seller is close to:
- produced in the same country
- exported to the UK at or about the same time
- the same in all respects including physical characteristics, quality and reputation although minor differences in appearance do not matter
- are produced in the same country
- can carry out the same tasks
- are commercially interchangeable
- the customs value of identical or similar goods arrived at under Method 4 (deductive method) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-4-deductive-method)
- the customs value of identical or similar goods arrived at under Method 5 (computed value) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-5-computed-value)
The ‘test’ values must have been accepted by us at or about the same time as the importation of the goods to be valued.

You could provide information which demonstrates one of the following:
- you and the seller trade with each other as though you’re unrelated
- you pay the same price as unrelated buyers in the UK operating at the same commercial level and purchasing similar quantities of the goods
- the price you pay is fully costed (it’s a commercial sale where the buyer and seller have acted independently without influencing the transaction value)
We also accept recent feasibilities or transfer pricing studies conducted by independent third-parties, as evidence to verify that the transfer price is not influenced by the relationship between the buyer and seller for customs valuation purposes only. Here we do not question nor verify your transfer pricing, as this falls under Corporation Tax.

We may also decide to examine the circumstances surrounding the sale to determine if the transaction value is acceptable.

In practice we are seeking assurance that you do not receive preferential treatment under the inter-company pricing arrangements because of your relationship with the seller.

If we have grounds to consider that the price is affected by the relationship, we’ll tell you what these grounds are. If you request, this will be in writing.

You’ll have a reasonable opportunity to respond.

If it is finally concluded that the relationship has influenced the price, Method 1 cannot be used. You must then try Method 2 (transaction value of identical goods) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-2-transaction-value-of-identical-goods).

Transfer pricing

Transfer pricing is a term used to describe how multi-national enterprise (MNE) set prices for the transfer of physical goods and intangible property or provides services between related (associated or connected) companies. They are the price set by multi-national enterprises that control each other or that are controlled by a common entity.

UK tax law and customs law require prices in a multi-national enterprise to be set, for Corporation Tax and customs valuation purposes respectively, as if group members are not related.

A transfer price may be used as the basis of a Method 1 value only if:
- it fulfils the criteria set out in the ‘Conditions for using Method 1’ and in ‘Buyer and seller related — General information’
- all relevant costs are included in the dutiable value if paid separately from the transfer price of the imported goods — check ‘Items you must add to the price paid or payable’ for information about relevant costs
When considering if a transfer price meets the requirements of Method 1, multi-national enterprises must justify their basis of value under customs valuation law. They cannot rely solely on their transfer pricing methodology. They must start with the World Trade Organization framework and the corresponding UK or EU customs valuation law.

This means that you will not usually be able to use Method 1 with a margin-based transfer pricing model. This is because the real economic value for the imported goods cannot be assured at the time when they are sold for export to the UK. This would also lead to uncertainty with any later adjustments.

Retrospective price adjustments

Retrospective price adjustments are where the price that you pay to the seller for your imported goods is revised or re-negotiated after the goods enter free circulation. When this happens, you must consider the customs valuation and Customs Duty implications.

Customs Duty adjustments

If, at the time of entry, you have contractual arrangements with the seller where retrospective price adjustments may happen, the invoice price for those goods is in effect provisional.

This means that you cannot arrive at a final value for Customs Duty at the time of entry and need to make security arrangements.

Find more information in ‘What to do if you cannot work out the value for customs duty’ in prepare to work out the customs value of your imported goods (https://www.gov.uk/guidance/prepare-to-work-out-the-customs-value-of-your-imported-goods).

Alternatively, you can pay the Customs Duty at the time of entry based on the provisional price but must undertake to tell HMRC if the price is adjusted.

We increase or decrease the amount of Customs Duty you need to pay, based on the agreed price adjustments you tell us about.

Retrospective price adjustments and valuation simplification

Retrospective price adjustments do not meet the criteria for using valuation simplification.

Find out more about valuation simplification in the section ‘When you can ask for a valuation simplification’.

Retrospective price increases

If there has been a retrospective price increase, we’ll treat this as part of the total payment made by you to the seller for the imported goods.

We’ll view your agreement to pay a price increase after ordering or buying the goods as confirmation that either of these were in place:
- a contractual arrangement implying that there could be a price adjustment
- an implicit understanding between you and the seller that an adjustment might take place
As a result of this, we’ll issue a demand (form C18) to you for the arrears of Customs Duty.

If you’re a large business trader, you should send details to your Customer Compliance Manager (CCM). In all other cases details should be sent to the National Post Clearance Centre (NPCC) (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/national-clearance-hub).

Retrospective price decreases

If there has been a retrospective price decrease, you may submit a claim for a refund of duty to the National Duty Repayment Centre. Your claim must be accompanied by appropriate evidence including full details of the contractual arrangements as well as rebates received from, and credit notes issued by, the seller.

If we are satisfied that the price decrease came from contractual arrangements in force when the goods entered free circulation, we’ll refund the appropriate amount of duty. The usual rules on refunds apply.

We must receive the refund claim within 3 years from the date of each relevant entry.

If you’re a large business trader, you should send details to your Customer Compliance Manager (CCM).

Import VAT adjustments

If there’s no Customs Duty to pay for the imported goods and the retrospective price adjustment affects VAT only, you should make the adjustment using your VAT Return. You will need to keep evidence of any retrospective price adjustments. This is in case they need to be checked at any post clearance audit.

Evidence required

The most important item of evidence is the contract between you and the seller. We accept that contracts may be verbal as well as written. However, in the case of a verbal contract, you must provide alternative evidence such as reports of meetings or correspondence between you and the seller. In cases of doubt, we may request an affidavit from the parties to the verbal contract.

Valuation declaration

You may have to complete a valuation declaration form when you have used Method 1. You only need to complete this form if we ask you to for import declarations we examine on a post importation audit. You use the form to give us information about the value declared on your import entry.

A valuation declaration can be signed by any person (natural or legal) who:
- resides or has a place of business in the UK
- has the information needed to answer the questions on the forms
If the forms are completed for a company, the person signing must be a responsible representative of the company, for example:
- director
- company secretary
- manager
One of these persons may authorise an employee to sign for the company. Clearing agents may also sign these forms on behalf of the importer when authorised to do so.

The person signing a declaration is responsible for the accuracy and completeness of the particulars given on the form and must be in possession of all the facts relating to the sale upon which the declared customs value is based.

Contact us

For general enquiries on valuation contact imports and exports general enquiries (https://www.gov.uk/government/organisations/hm-revenue-customs/contact/customs-international-trade-and-excise-enquiries).