Reeves to target Shein and Temu with import tax clampdown in Budget

Chancellor Rachel Reeves is reportedly planning to close a tax loophole that allows overseas retailers such as Shein and Temu to ship small parcels to the UK without paying customs duties - a move aimed at levelling the playing field for British retailers.

Reeves is expected to use her 26 November Budget to end the so-called “low-value imports” exemption, which currently allows goods worth up to £135 to enter the UK duty-free, according to The Guardian. The change could save the retail industry as much as £600 million a year.

The arrangement has been central to the business models of ultra-fast fashion platforms such as Shein and Temu, whose sellers are largely based in China. UK retailers, including NEXT, JD Sports, Sainsbury’s and Superdry have argued that the policy creates an uneven playing field, as they must pay import taxes on products sold to UK consumers.

Reeves’ move follows similar action in the US and EU. Earlier this year, Donald Trump’s administration abolished the country’s "de minimis" exemption, which had allowed goods worth less than $800 (£600) to skip import duty, in a bid to curb the rise of low-cost Chinese marketplaces. The EU has also tightened its own rules, with customs duties on low-value imports set to take effect from 2028.

Without comparable reform, experts have warned that the UK risks becoming a dumping ground for low-cost Chinese goods. The value of small parcels shipped from China to the UK more than doubled last year, from about £1.3 billion in 2023-24 to £3 billion in 2024-25, according to the BBC.

Andrew Opie, Director of Food and Sustainability at the British Retail Consortium, said it was "time for the chancellor to act" before the crucial Christmas trading period. "British retailers and the UK high streets face unfair competition from foreign sellers who are using the de minimis rules to import goods without the need to pay UK taxes," he said.

The Treasury confirmed that the chancellor is reviewing the customs treatment of low-value imports after listening to concerns from some of Britain’s largest retailers.