Michelle ThompsonThe Chancellor is reviewing a rule that allows foreign retailers like Amazon and Shein to avoid paying duty on items priced under £135.
Rachel Reeves is set to review the tax regime for low-value imports to address concerns about Chinese companies undercutting British retailers by flooding online marketplaces with cheap goods.
The Chancellor is considering changes to regulations that currently allow goods worth £135 or less, often sold through platforms like Amazon, Shein, and Temu, to enter the UK without customs duties.
This review follows pressure from major retailers such as Sainsbury’s and Next, who argue that the tax exemption has been exploited by fast-growing companies like Shein and Temu, which send small parcels directly to consumers.
Speaking in Washington on Wednesday, Reeves stated, “Retailers can see from the steps we’ve taken today regarding low-value imports that we are firmly supporting the British high street against the dumping of cheap imports that undercut UK retailers.”
Concerns are rising about the impact of Chinese retailers flooding the UK market, similar to the US, which is set to end its “de-minimis” exception for Chinese-made goods. Under this exception, parcels valued under $800 (£600) sent to individuals were exempt from import taxes and customs checks. However, the scheme, initially designed to simplify online shopping, is being phased out after the volume of such shipments exploded, reaching over 1 billion items worth $54.5 billion in 2023, mostly from China and Hong Kong.
The EU also announced in February that it would follow the US in eliminating its exemption for low-value parcels.
Helen Dickinson, CEO of the British Retail Consortium, welcomed the UK government’s review, noting that the policy, which was originally aimed at easing the burden of low-volume imports, needed revisiting due to the rise in potentially noncompliant products entering the UK market.
Retail entrepreneur Theo Paphitis, owner of Ryman, supported the review, calling it a necessary step to “level the unfair playing field” and protect the UK economy.
George Weston, CEO of Primark’s parent company Associated British Foods, also endorsed the move, emphasizing that ending the favorable tax treatment for low-value imports would be a significant boost for British businesses. The British Home Enhancement Trade Association (BHETA) has advocated for reducing the duty threshold to £40.
Will Jones, BHETA’s COO, highlighted that over 100 million small parcel shipments entered the UK in 2023, driven by online retailers like AliExpress, Amazon, Shein, and Temu. He pointed out that the current rules disadvantage UK suppliers, with over 95% of products entering the market unchecked for safety standards. For example, more than 98% of counterfeit iPhone chargers bought through the tax-exempt route fail to meet UK safety standards.
Jones stressed the importance of leveling the playing field for both UK and international producers, warning that while cheap products might appeal to consumers in the short term, they pose serious safety risks.
