Reeves to Phase Out Low Cost Import Tax Break Delaying Relief for British Retailers

The UK government will postpone the elimination of the controversial de minimis tax allowance for low value imports until March 2029, despite persistent calls from British retailers for urgent reform. The current system exempts parcels worth less than £135 from import duties, a rule that has been exploited by overseas ecommerce players such as Shein and Temu to undercut domestic businesses. As a result, more than 1.6 million parcels enter the country daily without customs levies, impacting the competitiveness of the UK high street and constraining job growth.

Major retailers, including Currys and Next, have pressed the government to accelerate changes, arguing that the regime threatens compliance standards and puts UK stores at a disadvantage. Although the Treasury has confirmed the planned abolition of the de minimis rule, the delayed implementation allows low cost importers a further four years of preferential treatment at the expense of domestic retailers.

Chancellor Rachel Reeves has stated that the reform aims to level the playing field and support British businesses, asserting that the government will reinvest the estimated £500 million annual revenues into public services and economic growth. Officials indicate that a gradual phase out will be managed to prevent disruption at borders, citing concerns that abrupt changes could damage brands and logistics providers. A consultation on the design of new customs arrangements will begin shortly, with detailed proposals anticipated in the coming months.

Industry bodies, including the British Retail Consortium, have welcomed the move but expressed dissatisfaction with the protracted timeline and the risk of continuing non-compliant imports in the interim. The chief executive of Associated British Foods remarked that the loophole has harmed UK retail and allowed substandard goods to bypass oversight, urging rapid action.

The UK joins other major economies moving to remove similar exemptions. The European Union will gradually abolish its duty free threshold for goods worth less than €150, implementing full compliance by July 2028. Several EU countries have announced additional enforcement measures ahead of the bloc-wide deadline. The United States scrapped its equivalent $800 threshold earlier this year, though the policy change caused significant disruption at ports and among couriers. British retailers are preparing for adjustments in the regulatory environment but remain concerned that continued delays will reshape the retail landscape to their detriment.