A new agreement has been signed between the Isle of Man and UK Governments.

Treasury Minister Alf Cannan amended the 1979 Customs and Excise Agreement on Monday.

It took place in London with the UK’s Financial Secretary to the Treasury Mel Stride MP.

The Manx Government says it’s a significant moment in the Isle of Man’s preparations for the UK’s withdrawal from the European Union on March 29.

The Isle of Man is currently subject to EU law in relation to customs.

This is because the UK’s membership of the EU extends certain rules to the Isle of Man, despite the Island not being part of the EU.

When the UK leaves the EU next year this status will fall away, meaning a new arrangement needed to be entered into.

Had the new arrangement not been forged the effects on the Island could have been considerable.

Mr Cannan says: "Securing this Arrangement has been a priority for the Island. 

"Today’s signing represents a milestone in our work to prevent disruption for Isle of Man residents and businesses as a result of the UK’s withdrawal from the EU, whilst also protecting our vital trading relationship with the UK.

"This arrangement is the culmination of considerable work that has taken place over some time.”

An important difference in the new Arrangement is that the Channel Islands will become part of the customs union arrangements, creating a United Kingdom and Crown Dependencies Customs Union.

This means that goods will be able to move freely between the Isle of Man, UK and the Channel Islands for customs purposes only.

However the Channel Islands will not be entering into arrangements for the sharing of customs duties, VAT and excise duties.