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Taxation: Imports

Volume 465: debated on Tuesday 23 October 2007

To ask the Chancellor of the Exchequer how the figure of £145 for the value of goods that can be imported into the UK from outside the EU without paying tax was reached; when this figure was last revised; if he will make it his policy to index that figure in line with inflation; and if he will make a statement. (160083)

The value of goods that can be imported into EU countries (including the UK) from outside the EU, without paying tax is stated in the directive on the harmonisation of provisions set out by law, regulation or administrative action relating to exemption from turnover tax and excise duty on imports in international travel (directive 69/169/EEC).

When directive 69/169/EEC was first agreed in 1969, the allowance was set at €45 (£36). In 1994, the directive was amended to increase the allowance to €175 (£136). The sterling conversion was then revalorised from £136 to £145 in 1995 to reflect exchange rate fluctuations. Since then the allowance has not been revised.

Following the announcement at Budget 2005 that the Government would be seeking increases in travellers’ allowances, the European Commission issued a proposal to increase the duty-free limit on goods other than alcohol and tobacco. EU Finance Ministers reached agreement in November 2006 to increase this limit to €430 (£290) for air and sea travellers and €300 (£200) for travellers by land. It was also agreed that this limit would be reviewed every four years.

The new allowances will be introduced in the UK once the relevant European legislation has been formally amended. The Government are pressing the European Commission to bring forward the finalised legislation, so that travellers will be able to benefit from the higher limits.