Valuing imported goods using Method 4 (deductive method)
Source: gov.uk (2025-06-24)

How to use Method 4 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 4 you must first have tried to use Method 3 (transaction value of similar goods) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-3-transaction-value-of-similar-goods).

Method 4 is based on the selling price of the goods in the UK. You may try Method 5 (computed value) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-5-computed-value) before Method 4 if you want to.

When you cannot use Method 4

You cannot use valuation Method 4 if there’s no sale to an unrelated person in the UK. You must try Method 5 (computed value) if you’ve not already considered it. If you cannot use Method 4 or 5 then you must try Method 6 (fall-back method) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-6-fall-back-method).

What to base the customs value on

For Method 4 you can choose to use the price of each item from one of the following:
- the actual imported goods
- identical goods — check Method 2 (transaction value of identical goods) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-2-transaction-value-of-identical-goods) for the definition of identical goods
- similar goods — check Method 3 (transaction value of similar goods) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-3-transaction-value-of-similar-goods) for the definition of similar goods
You base the customs value on the price of each item (the unit price) as sold in the UK, in the condition as imported, to customers unrelated to the seller.

The unit price must relate to sales in the greatest aggregate quantity at the time of, or within a reasonable time period ending with, the importation of the chargeable goods into the UK. To work out the ‘greatest aggregate quantity’ you need to add together the number of items sold at each price. The largest number of items sold at one price is the greatest aggregate quantity.

You must be able to produce details of the sales in the greatest aggregate quantity at the time of entry into free circulation.

Examples of working out the greatest aggregate quantity

Example 1

The price list shows that different prices are charged for different quantities ordered.

Sales are made as follows.

The greatest number of units sold at one price is 80. The unit price of these is £90. This means that the unit price in the greatest aggregate quantity is £90.

You import 2,000 units. The value of the consignment is therefore 2,000 multiplied by £90 or £180,000. From this value the allowable deductions explained later in this guidance are to be made.

900 units are imported.

500 units are sold at £95 each. 400 units are sold at £90 each.

The greatest number of units sold at one price is 500 units. The unit price is £95 each. This means that the unit price in the greatest aggregate quantity is £95.

The value of the 900 units is therefore 900 multiplied by £95 equals £85,500. From this value the allowable deductions explained later in this guidance are to be made.

Example 2

200 units are imported, they are sold in small lots as follows.

The quantity sold at each unit price is as follows.

The greatest number of units sold at one price is 65. The unit price is £90. This means the unit price in the greatest aggregate quantity is £90.

The value of the 200 units is therefore 200 multiplied by £90 equals £18,000. From this value the allowable deductions explained later in this guidance are to be made.

If there is no sale at the time of, or within a reasonable time period of, the goods being imported

You can base the customs value on the unit price of the actual sales of the imported goods that take place up to 90 days after importation.

As you cannot establish the customs value until the goods have been sold you must request release against a deposit.

If the goods are not sold in the UK in the same condition as when they were imported

You can base the customs value on the price at which the goods are sold after processing, however, you cannot do this if the goods:
- lose their identity (unless you can accurately and easily establish the value added by the processing)
- keep their identity but form a minor part of the goods sold
Deductions you must make from the unit price

You must deduct:
- either the commissions usually paid or agreed to be paid, or, the addition usually made for profit and general expenses in connection with sales in the UK of imported goods of the same class or kind
- the usual costs of transport, insurance and associated costs incurred in the UK
- UK customs duties and internal taxes payable in the country of importation
- the value added by any processing carried out in the UK before the goods are sold
The deduction for actual profit and general expenses only applies if your figures are similar to those usual for sales in the UK of imported goods of the same class or kind. Goods of the same class or kind means goods which fall in a group or range of goods produced by a particular industry or sector of industry. It includes identical and similar goods. The goods do not need to have been imported from the same country as the goods being valued.

If customs authorities question deductions

You should have information available to show that the deduction you’ve made is ‘usual’ by comparison with importers within your trade sector.

Providing evidence

Along with the import entry, you must produce one of the following showing the unit price in the greatest aggregate quantity:

a sales invoice

a price list current at the time of importation

other evidence as agreed with us

Unless an overall percentage deduction has been agreed with us, we also need details of the actual deductions claimed.

If the value is not known at the time of importation

You must give a reasonable estimate of the final sales value for deposit purposes.

This estimate must be supported by a pro-forma invoice, statement of value or other evidence.

For importations of fresh fruit and vegetables and cut flowers, you do not have to wait until all the goods are sold to establish the customs value. Once you’ve sold enough to arrive at the unit price, you must send copies of the sales invoices and a copy of your calculations to the National Import Duty Adjustment Centre (NIDAC).

Unless an overall percentage deduction has been agreed with us, we will also need details of the actual deductions claimed. Duty will either be taken to account, refunded or called for.

In the fresh fruit and vegetable and cut flowers trade the account sales procedure may be used as a basis for arriving at the duty payable.

Fresh fruit, vegetables and cut flowers (using the account sales procedure)

If you import fresh fruit, vegetables or cut flowers on consignment you can use the account sales procedure to arrive at the customs value under Method 4. A valuation declaration is not required.

Calculating deposits at importation

As the goods have not been sold at the time of importation, the amount of duty you must pay cannot be established. This means you’ll need to request release of the goods against a deposit.

To calculate the deposit, you must declare on the import entry either the:
- price you expect to get for the goods
- current market value published by the trade associations
- simplified procedure value (https://www.gov.uk/guidance/check-simplified-procedure-value-rates-for-fresh-fruit-and-vegetables)
If you use one of the first 2 options, you can deduct before calculating the deposit:
- for profit and general expenses or commission, and transport costs in the UK
- the included duty
Working out the duty payable

Within 90 days of the importation, you must produce to NIDAC evidence of the sale of the goods. No other values, such as simplified procedure values or values used to work out the value of the deposit, may be used.

If any goods are not sold in the same state as imported or are unsold, you must use the unit price established for identical or similar produce in the same consignment. The identical or similar produce must have been sold in the condition in which it was imported.

We’ll then work out the amount of duty you must pay.

If the deposit you paid was too high, you’ll receive a refund. If it was too low, we’ll ask you to pay more.

Evidence of sale needed

You must be able to produce on request copy invoices issued to wholesalers or supermarkets. These invoices must show the prices paid by these customers.

If you find it difficult to produce copy invoices (perhaps because you sell to many customers) you can produce a statement showing the details of:
- names and addresses of the wholesalers or supermarkets
- quantity sold to each wholesaler or supermarket
- prices paid by each wholesaler or supermarket
- details of items repacked, destroyed or lost
You must certify on the invoices or statement that:
- all the goods on the import entry are accounted for
- the prices shown are those paid by the wholesaler or supermarket
Deductions

You may deduct from the amount paid to the importer by the wholesaler (net of wholesalers’ commission and handling expenses) or the price paid by the supermarket:
- 10% to cover your commission and general expenses (the percentage has been agreed with the trade associations)
- the usual costs of transport, insurance and associated costs incurred in the UK
- UK customs duties
You need evidence for these deductions. You can use:
- a copy of the freight account, which can be split by the distance inside and outside the UK
- statement of the cost of transporting the goods from the person supplying the freight
Only importers who provide their own transport can make a simple statement of the cost of UK freight.

Losses in repacking

The number of items (such as cartons or boxes) lost in repacking must be shown on the duty reconciliation statement. Minor losses of this nature may be disregarded but if the losses are substantial, you must follow the procedure set out in Goods lost, damaged or defective (https://www.gov.uk/guidance/valuing-imported-goods-that-are-lost-damaged-or-defective).

Calculating the customs value

You need to use the following formula:
- price paid by the wholesaler or supermarket
- less 10%
- less transport costs etc in the UK
- less included duty
Example of calculating the customs value

The goods are sold for £10,000. The transport costs in the UK are £200. The duty rate is 10%. The deposit was £900.

Using the formula:

Price paid £10,000 less 10% (£1,000) equals £9,000

less transport costs £200 equals £8,800

less included duty (10 divided by 110 multiplied by 8,800) equals £800

gives a customs value of £8,000

The duty due is therefore £800.

You’ll get a refund of £100 (£900 minus £800).

The document used for this calculation is called the duty reconciliation statement. You must provide this statement so that the duty due can be worked out.

Guaranteed advances

You may agree to make a payment to the supplier on condition that if the net proceeds from the sale of the goods are:
- more than the agreed payment, you’ll also send the supplier the balance
- less than the agreed payment, you’ll accept the loss
This agreement is called a guaranteed advance.

In the first case where the proceeds of the sale are more than the agreed payment, you can use Method 4.

In the second case, where there is a loss, you use the guaranteed advance as the basis to arrive at the customs value under Method 1 (transaction value) (https://www.gov.uk/guidance/valuing-imported-goods-using-method-1-transaction-value).

Example where guaranteed advances are involved

The goods are sold for £5,000. Your commission and expenses are £600. The duty rate is 10%. You agree to pay the supplier 2 payments:

£3,000

£5,000

Goods sold for £5,000 less commission and expenses £600 equals £4,400 less the included duty (10 divided by 110) multiplied by £4,400 equals £400. Net proceeds £4,000 less amount already paid to supplier £3,000 leaves balance payable to supplier of £1,000.

In this case you can use Method 4.

Goods sold for £5,000 less commission and expenses £600 equals £4,400 less the included duty (10 divided by 110) multiplied by £4,400 equals £400. Net proceeds £4,000. The amount already paid to the supplier £5,000 exceeds the net proceeds this means you cannot use Method 4.

You use Method 1 (transaction value) and base the customs value on the guaranteed advance of £5,000.

Declaring goods using Customs Declaration Service software

If you’re submitting your declarations using Customs Declaration Service software, read the Customs Declaration Service instructions for completing imports (https://www.gov.uk/government/publications/cds-uk-trade-tariff-volume-3-import-declaration-completion-guide).