Duty Relief Exemption: Small Parcels

Thursday 26th February 2026 Lords Chamber

Question

11:12

Asked by

[Baroness Hoey]

To ask His Majesty’s Government what assessment they have made of the new tax on small parcels entering Northern Ireland from Great Britain as a result of the EU’s change to the duty relief exemption.

[The Financial Secretary to the Treasury (Lord Livermore)]

My Lords, the Government are committed to the smooth flow of goods from Great Britain to Northern Ireland under the Windsor Framework. The Government are aware of the EU’s plans to remove its relief for low-value imports from 1 July 2026. The facilitations under the Windsor Framework are unaffected by this change, meaning that goods moving between Great Britain and Northern Ireland can continue to move under the UK Carrier Scheme and the UK Internal Market Scheme without the need to pay duty.

[Baroness Hoey (Non-Afl)]

My Lords, I thank the Minister for that. Responding recently to two questions from me and the noble Lord, Lord Empey, he said that we would continue to engage with the EU. Now that the regulations have been published just two weeks ago—written in the normal EU way that is quite difficult to understand, but I am sure the Minister does—can he clarify for us whether the new rules will operate subject to EU regulation 2023/1128 such that any trusted trader on the UK Internal Market Scheme need not pay any duty? Can he also clarify whether the duty will be paid by the person sending the parcel in GB, the person receiving the parcel in Northern Ireland or both? Does he agree that we need detailed clarification on this? People are very worried about it—maybe wrongly, maybe rightly. Will the Minister make sure that there is clarification on exactly how this is going to work and how it will affect people in Great Britain sending parcels to their relatives in Northern Ireland?

[Lord Livermore (Lab)]

Yes, I can give the noble Baroness the clarification she seeks. The answer to the first question she asked is yes. As I said in my opening Answer, in May last year the Government introduced important new arrangements for freight and parcel movements to ensure that goods can continue to move smoothly from Great Britain to Northern Ireland. These facilitations under the Windsor Framework are unaffected by the EU’s change to its duty relief exemption. Goods travelling from Great Britain to Northern Ireland can continue to move under the UK Carrier Scheme and the UK Internal Market Scheme without the need to pay duty.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I thank my noble friend the Minister for his detailed and clear response. Does he agree that one should be very careful about what you argue and campaign for, because sometimes you get what you want? Does he agree that those who argued for the hardest possible Brexit got the Windsor Framework? I agree with that.

[Lord Livermore (Lab)]

My noble friend is absolutely right that back in 2016, Sir John Major and Sir Tony Blair very clearly said that Brexit will present very specific challenges for Northern Ireland, given its land border with an EU member state and the importance of safeguarding the Good Friday agreement. Unfortunately, many of those concerns were dismissed, but now that the reality of Brexit does not match up to the fantasy version that other people imagined, they seek to blame others for the consequences of their own actions. My noble friend is equally right, though, that the Windsor Framework is the best possible solution to Northern Ireland’s unique circumstances.

[Lord Leigh of Hurley (Con)]

My Lords, the Minister will be pleasantly surprised to hear that I agree with him: the GB-NI movement of goods is covered by Article 5 of the Windsor agreement. The issue is about the movement of goods into Northern Ireland post 5 July, when the EU rules change. Can he clarify whether the €3 charge and the €2 handling charge will be applied from 1 July, and will that money go to the EU, not the UK? Furthermore, can he explain why France and Italy are bringing in these changes now, and the UK is having to wait until 2029 to implement this revenue-generating initiative?

[Lord Livermore (Lab)]

Yes, I can. The noble Lord asks about goods sent from the rest of the world; the EU has only just published its legislation—sorry, it was the EU handling fee that he asks about. Although the EU has published its legislation relating to the matters I was describing previously, it has not yet published its legislation relating to the EU handling fee. We are obviously aware that the EU is considering plans to introduce a handling fee for every consumer parcel imported by November this year. It has not yet finalised its plans or published final legislation, so we have not yet carried out an assessment of its implications at this point.

The noble Lord also asks about our own reforms, which I know he has championed for many years. As he knows, the Chancellor announced at the previous Budget that the Government will remove low-value import relief by March 2029 at the latest, but it is important that we consult on those arrangements and how they will affect retailers. That consultation will close next month, on 6 March.

[Lord Fox (LD)]

My Lords, the Minister has already agreed with our view that this situation is really caused by the appalling nature of the deal that the Conservative Party negotiated on Brexit. Does he also agree that it demonstrates that the rapid agreement of a customs union and other alignments with the EU would not only have huge financial benefits to the United Kingdom but smooth out issues like this that were caused by those in Northern Ireland who advocated for Brexit in the first place?

[Lord Livermore (Lab)]

The noble Lord knows that I absolutely agree with his analysis of the problem, and I greatly admire the consistency with which he has pursued his policy for a customs union. The points he makes are obviously factually correct. This Government are pursuing an EU reset. The UK and the EU have agreed to negotiate an SPS agreement, which aims to significantly reduce barriers to trade in agri-food goods, support simplified movements between Great Britain and Northern Ireland and the EU, and boost our exports. Negotiations that we are taking forward on electricity and emissions trading will have a similar effect on businesses trading with Northern Ireland and the EU.

[Lord Dodds of Duncairn (DUP)]

I thank the Minister for the answers that he has given thus far. He mentioned the EU reset negotiations. Can he tell us whether this issue is part of those negotiations and, more generally, what the timetable is for the outcome of the negotiations? Is the pursuit of free, untrammelled internal trade within the United Kingdom something that he and other Government Ministers have at the forefront of their consideration, given that the current restrictions are doing enormous damage to business and consumer confidence in Northern Ireland, as illustrated in the recent report by the Federation of Small Businesses, which I urge every Member of this House to read in detail?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for the points that he makes. As I said, the EU negotiations will cover an SPS agreement, which will have significant advantages for trade and the movement of goods between Great Britain and Northern Ireland and the EU, and help boost our exports. Similarly, the negotiations on electricity and emissions trading will have beneficial effects for businesses trading with Northern Ireland and the EU. On his question about the Windsor Framework, goods will continue to benefit from the Windsor Framework facilitations, including manufactured goods which are not within the scope of new agreements that we are taking forward with the EU. On the recent report on the Windsor Framework from the Federation of Small Businesses, as the noble Lord knows, the Government recently accepted all the recommendations made by my noble friend Lord Murphy in his Independent Review of the Windsor Framework. This included recommendations that align with the points raised by a wide range of stakeholders, including those set out by the Federation of Small Businesses.

[Baroness Neville-Rolfe (Con)]

Returning to the issue of small parcels, we must ensure that all those concerned are aware of the rules governing trade with Northern Ireland, including all exporters into Northern Ireland, families sending parcels and, of course, Northern Ireland businesses and consumers, who will bear the cost, with the revenue going to the EU. Can the Minister reassure us that the Government are on top of all this and will introduce the new sets of payments—the £3 duty or the £2 handling charge—alongside existing rules in a clear, unbureaucratic and timely manner? It is unclear for the individual just what they have to do.

[Lord Livermore (Lab)]

The Government are on top of it, perhaps slightly more so than the noble Baroness, given that her question was incorrect. I have already clearly said that these facilitations under the Windsor Framework are unaffected by the EU’s change to its duty relief exemption, and therefore there will be no need to pay duty.

[Lord Bew (CB)]

My Lords, what is ultimately at stake here is the stability of the institutions of the Good Friday agreement. The EU, to its credit, stretched itself in the lead-in to the Windsor Framework, opening negotiations with the Truss and Sunak Governments. A moment was reached that allowed the Windsor Framework to be part of that process and to return the functions of the institutions. Since then, the EU seems to have returned slightly to its older ways—a series of interventions that are causing destabilisation and strengthening the forces in Northern Ireland that are politically opposed to the Good Friday agreement. In dealing with the EU, will the Minister please make it clear that the survival of the institutions of the Good Friday agreement is fundamental, and that actions that strengthen the support of those hostile to the Good Friday agreement should be avoided at all costs?

[Lord Livermore (Lab)]

Absolutely. We are fully committed to implementing the Windsor Framework in good faith and protecting the UK internal market. The Windsor Framework is the best workable solution to Northern Ireland’s unique circumstances. We will work constructively with all stakeholders—the EU, the Northern Ireland Executive, businesses, political parties and civic society in Northern Ireland—to achieve this aim, taking into account the implementation deadlines.