UK retailers face delayed low-value import duty reform until 2028

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UK import duty reform delay

Highlights

UK Treasury will start charging import duties on parcels worth less than £135 from October 2028, moving forward from the previous March 2029 deadline.
The government rejected retailer calls for a temporary flat fee on small imports, maintaining a regime that major chains like Marks and Spencer and Primark argue benefits online competitors like Shein and Temu.
Goods entering the UK under the £135 threshold have tripled to 1.6 million items per day by 2024, while the EU imposes a €3 temporary duty per sub-€150 online item from July 2024 ahead of broader reforms in 2028.

Import duty timetable and retailer response

As reported by Financial Times, the Treasury says it will begin charging import duties on parcels worth less than £135 sent to the UK from October 2028, earlier than the previous target of March 2029. The department also rejects calls from retailers including Marks and Spencer, Argos, Next and Primark for a temporary flat fee on small imports.

The issue centres on a tax exemption that retailers say benefits online groups such as Shein and Temu, which send low-cost goods directly to consumers. High street chains argue the arrangement lets overseas competitors avoid import duties and potentially sidestep stricter safety checks that apply more heavily to domestic sellers.

Chancellor Rachel Reeves promised reforms in last year’s Budget, but had only committed to a detailed framework by March 2029. Helen Dickinson, chief executive of the British Retail Consortium, says the revised deadline still does not go far enough and leaves UK retailers competing on an uneven field against importers not paying tariffs.

Pressure on high streets and wider trade context

The Treasury says it has listened to the retail sector and that bringing forward the change to low-value imports targets cheap goods and puts Britain’s high streets first. Treasury minister Dan Tomlinson says the action addresses unfair competition and businesses that are harming town centres.

Retail groups remain dissatisfied, saying the delayed timetable weakens efforts to revive town and city centres and protect jobs. George Weston, chief executive of Associated British Foods, which owns Primark, says the decision is dispiriting and argues the chancellor is foregoing hundreds of millions of pounds in potential revenue for more than two years.

The government estimates that the volume of goods entering under the £135 threshold triples in the three years to 2024 to about 1.6 million a day. The EU is taking a faster approach, imposing a temporary duty of €3 per online item worth less than €150 from the start of July, before a broader overhaul of its low-value import regime from 2028.

Our previous coverage of the UK tax gap highlighted HMRC’s estimate that unpaid and underpaid taxes rose to £59.2bn in 2024–25, with small businesses accounting for the majority of the shortfall. We also noted the government’s response: additional funding for enforcement staff alongside broader system reforms such as Making Tax Digital to improve compliance and reduce errors.

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