Global trade is a complex area, and recent US customs changes have added new layers of compliance for UK businesses. If your company ships goods to the US, understanding how UK transfer pricing rules interact with US customs requirements is essential.

Over the past nine months, there has been significant changes in US customs and tariffs. We’ve outlined the key changes below:

1. April 2025: A baseline 10% tariff now applies to UK goods unless a different rate is specified.

2. August 2025: The $800 de minimis exemption was removed, meaning all goods require formal customs entry.

3. January 2026: Additional tariffs announced for the UK and several EU countries in response to tensions over Greenland.

These changes are leading UK businesses to increasingly incorporate US subsidiaries to act as Importer of Record (IOR) for compliance and logistics reasons. This brings new tax and documentation obligations for the group as the intercompany transactions must be at arm’s length from a transfer pricing perspective. However, customs valuation requirements differ but operate in parallel, meaning mistakes in one area can create problems in the other.

Transfer pricing vs. transaction value: What’s the difference?

When dealing with the cross-border movement of goods within a corporate group, the pricing of the goods is central to the transfer pricing compliance and the customs transaction value. Both the transfer price and the transaction value are relevant for related-party transactions, but they serve different purposes:

• Transfer pricing: Ensures profits are allocated on an arm’s length basis between related entities.

• Transaction value: What customs consider the value of the imported goods to be at the border,including royalties, commissions, and mark-ups.

Aligning your transfer pricing and customs requirements can be complex, with the mispricing of good or services leading to the overpayment of duties and tariffs.

Key considerations for UK businesses

Setting up a US subsidiary in response to the changes? Below, we’ve outlined three key considerations:

1. Pricing of goods: The price of goods shipped to the US determines both transfer pricing compliance and customs duties.

2. Service charges: UK entities often provide value-driving services to US subsidiaries, and these need to be priced appropriately.

3. Documentation: The UK offers SMEs an exemption from formal transfer pricing documentation, but there is still a requirement to operate arm’s length pricing, and the US does not have a similar exemption. Intercompany transactions must therefore be well-documented to ensure compliance and minimise the risk of challenge.

We can support businesses expanding internationally in determining arm’s length prices for goods and services and aligning group transfer pricing and customs valuation strategies. We can also prepare robust documentation to support your policies and reduce your compliance risk. Inadequate documentation can lead to penalties or disputes over transaction valuations from customs authorities.

Next steps

If you’re unsure whether these changes affect your business, or need help setting up compliance processes, fill in the form below and we’ll be in touch. Our team of transfer pricing specialists can help you navigate these changes and ensure compliance.