UK weighs earlier crackdown to close import tax loophole on small parcels

Following sustained pressure by UK retailers the government may accelerate changes to customs rules that currently let overseas online sellers, including Chinese ultra-fast retailers Shein and Temu, ship low-value goods to UK shoppers without tariffs, according to a report by The Times. 

Ministers are reportedly assessing whether elements of the reform could be introduced before the March 2029 deadline set out by the Treasury last year, The Times reported. 

An import tax exemption currently allows retailers based overseas to send small parcels worth less than £135 to the UK without paying import duties.

Chancellor Rachel Reeves confirmed plans in the 2025 autumn budget to follow in the footsteps of the US and Europe and review the customs loophole, saying she wants to “support a level playing field in retail”.

But the proposed reforms are not expected to be in place until 2029, with the government maintaining that a phased transition is needed to avoid disruption at borders. 

UK retailers have previously argued that the timetable the government has suggested is too slow and leaves domestic businesses at a competitive disadvantage.

Making use of the loophole, Shein and Temu have expanded rapidly in the UK by shipping low-cost goods directly from overseas manufacturers to consumers, bypassing many of the costs shouldered by retailers importing through conventional supply chains.

According to consultation documents by the Treasury published in November last year, low-value import volumes tripled between 2021 and 2024, with total declared trade value rising from £3.8 billion in 2023-2024 to £5.9 billion in 2024-2025.

As TheIndustry.fashion covered in May, ASOS, Marks & Spencer, Primark and NEXT were among firms to sign a letter to the Prime Minister and Chancellor that suggested imposing a £2.60 charge on each small parcel sent to the UK.

The letter explained that the so-called “de minimis” threshold had become a “structural advantage for overseas retailer without a footprint in the UK, who undermine retailers that employ millions of people across the country, pay local taxes and pay import duties.”

The industry letter had also highlighted that the UK was becoming an outlier by not tackling the loophole. 

US President Donald Trump had already taken action to scrap exemptions for low-value imports last year, which had previously allowed parcels worth less than 800 US dollars (£595) to enter the US without paying any tariffs.

The EU is also changing the rules so that parcels worth less than 150 euros (£112) will no longer be duty-free and is proposing to impose a three euro (£2.23) charge per item.

The industry letter added that since the US changed its rules, there had been an “immediate switch in overseas retailer focus into the UK and EU, exacerbating this structural disadvantage for UK retail”.

The retailers argued that a £2.60 flat-fee on each parcel sent to the UK would raise £1.7 billion for the Government a year and could be introduced quickly and temporarily like in the EU.

Changes will also encourage people to spend at retailers with a UK presence and improve product safety checks, according to the firms.

As of yet, no earlier implementation date has been announced. Ministers are still working through consultation responses, which closed in March 2026.