Sudden news in the UK market: a 25% tariff increase on low-value goods

Termination of the duty-free policy for low-value imported goods As global trade becomes increasingly integrated, the UK—among Europe’s most important e-commerce markets—has drawn worldwide attention with its evolving e-commerce policies. Reports indicate that recently, UK Chancellor of the Exchequer Rachel Reeves publicly stated that, following numerous complaints from domestic retailers, relevant authorities will review the tax regime for low-value imported goods to curb the phenomenon whereby “cheap goods sold via online platforms undermine the competitiveness of UK retailers.” This implies that the long-standing UK policy exempting imported goods valued under £135 from import duties faces a historic potential overhaul—a further far-reaching policy shock following the recent U.S. cancellation of the Section 321 (de minimis) tariff exemption under Trump. Rachel Reeves plans to abolish the duty-free regime for low-value imports. Source: The Guardian Industry insiders note that if the UK abolishes this exemption, low-cost imported goods would likely incur an additional 20% VAT and up to a 25% customs duty, resulting in an estimated overall cost increase of 20–30%. From Rachel Reeves’s remarks, it is evident that this review stems primarily from sustained pressure exerted by major UK retail corporations. Specifically, the original intent behind the low-value goods duty exemption was to facilitate cross-border shopping and promote digital economic development. However, as cross-border e-commerce has surged, the drawbacks of this system have become increasingly apparent. Cross-border platforms—including Amazon, eBay, Walmart, Temu, and Shein—have significantly ramped up sales of low-priced products in the UK. In 2023 alone, over one billion duty-exempt imported items entered the UK, with a total value reaching $54.5 billion. A flood of low-priced goods entering the UK market. Source: The Guardian Under these circumstances, the price advantage conferred by duty exemption has placed mounting pressure on domestic retailers. Many—including Sainsbury’s and Next—have voiced dissatisfaction, arguing that the current duty exemption policy unfairly disadvantages UK-based retail enterprises. Theo Paphitis, entrepreneur and owner of Ryman Retail Group, stated that retailers have long been “calling for a level playing field.” Helen Dickinson, Chief Executive of the British Retail Consortium—the trade body representing most major UK retailers—also welcomed the review: “It shows that the authorities have listened to retailers’ concerns and feedback.” However, UK domestic retailers and low-priced imported goods are not absolutely antagonistic. Some organizations representing SMEs caution that abolishing the duty exemption for low-value imports could raise product costs, thereby affecting their pricing strategies and profit margins. Abolishing the duty exemption carries both benefits and drawbacks for UK domestic businesses. Source: BBC

HMRC launches public consultation on scrapping the £135 de minimis threshold for import duty exemption

In 2025, major global economic markets are either cancelling or preparing to cancel the de minimis exemption for low-value imported goods. While the United States abolished its $800 de minimis exemption in May this year, the European Union plans to eliminate its €150 exemption by 2028. Meanwhile, the UK is currently conducting a public consultation on scrapping its £135 de minimis duty exemption—and intends to implement the change effective March 2029. Based on current trends, the UK’s abolition of the £135 de minimis duty exemption appears virtually certain. This reform aims to align the UK with international practice, safeguard tax revenues, reduce the risk of undervaluation, and foster a fairer competitive environment for domestic retailers. The public consultation will close on 6 March 2026. I. Details of the Public Consultation Chancellor of the Exchequer Rachel Reeves confirmed in her 26 November 2025 Budget Statement that the UK will abolish the £135 duty-free allowance for consumers importing small parcels. This measure is projected to generate £600 million in urgently needed annual fiscal revenue and establish a level playing field for UK e-commerce businesses and retailers required to pay import duties. The government is now consulting on the design of the new arrangements—including what data should be collected, how duties will be levied, whether additional fees will be imposed on low-value imports to fund administrative costs, and possible adjustments to VAT collection mechanisms to accommodate the new framework. This move has been welcomed by major UK retailers.

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