Do brand royalties count in UK customs value?
Yes, if the royalty relates to the imported goods and payment is a condition of their sale. Paying a separate, unrelated brand owner does not by itself keep the fee outside customs value. Review the licence and supply agreements together. Discuss the factory arrangements with Cambridge China Bridge.
A separate payee does not settle the question
HMRC requires both a relationship to the imported goods and a condition of sale. Its detailed guidance expressly recognises that payments to an unrelated licensor can meet the sale condition. Start with our customs value guide for the wider valuation calculation.
Draw a map showing the buyer, factory, seller and licensor. Beside each payment, record who pays, who receives it and what the payment buys. Keep the goods price and royalty visible even when different teams handle them. For tooling payments, see our guide to separate mould fees and customs value.
Identify what the royalty actually buys
Ask the licensor to identify the licensed products and rights. Match these to the goods ordered: brand artwork on the product, a licensed design or a production process. Gather the product schedule, specification and royalty calculation rather than relying on the invoice description.
For a fee covering a wider arrangement, ask which elements concern the imported goods and which concern other components or services. Request a documented allocation from the licensor and give it to your customs adviser; do not invent a split.
Apply the condition-of-sale test
HMRC treats payment as a sale condition where the seller or someone related to the seller requires it, where it satisfies the seller’s contractual obligation, or where the buyer cannot buy, or the seller cannot sell, without paying the licensor. A separate royalty invoice does not answer these questions.
Ask what happens if the royalty remains unpaid. Highlight clauses stopping production or supply, cancelling the sale, or making acquisition of the goods a contractual breach. Ask the factory and licensor to explain how these clauses work together, then refer the documents to your customs adviser.
Read the agreements together
HMRC says the goods contract may contain no explicit royalty reference. Collect the signed licence, supply contract, manufacturing agreement, product schedules and amendments. Do not conclude that the royalty is excluded just because the purchase order is silent.
Prepare a short note identifying the relevant clauses, covered products, payment recipient and consequences of non-payment. Attach correspondence explaining ambiguous terms. Send this alongside the papers in our customs documents guide, before asking the broker to finalise the valuation.
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Resolve the amount before shipment
Ask your customs adviser to confirm inclusion or exclusion in writing and explain the treatment of any mixed fee. Ask whether the goods price already contains the amount under review, so the working does not count it again.
If the contractual position remains unclear, use our guide to when to seek an Advance Valuation Ruling to prepare the next discussion. Cambridge China Bridge has staff in China; discuss with us which factory documents and explanations you need to gather.
Frequently asked questions
Are royalties to an unrelated brand owner dutiable?
They can be. The payment must relate to the imported goods and be a condition of sale. An unrelated recipient does not automatically exclude it.
What if the factory invoice does not mention royalties?
Review the licence and supply documents together. HMRC says the goods contract may not explicitly mention royalties; silence alone does not settle the valuation.
Which contracts should I give my customs broker?
Send the signed licence, supply and manufacturing agreements, product schedules and amendments. Highlight payment obligations and clauses governing what happens if royalties are unpaid.
What if the royalty covers goods and services?
Ask the licensor for a documented allocation and have your customs adviser review it. Keep the calculation and supporting explanation; do not choose an unsupported split.