Tax Loophole Closure on Chinese Imports Could Drive UK Consumer Prices Higher

Major delivery companies have issued stark warnings about the potential consequences of closing a tax loophole that currently allows Chinese e-commerce giants to ship low-value goods to Britain without customs duty. The proposed changes could result in significant price increases and delivery delays for UK consumers.

Royal Mail, DHL Express and Evri have cautioned the government against yielding to retailers’ demands to eliminate the rule permitting duty-free shipments valued up to £135 from overseas. The logistics providers argue that implementing duties on additional low-value goods would create substantial friction at British borders.

DHL Express emphasised that lowering the de minimis threshold would necessitate processing more customs declarations, leading to extended delivery times and heightened costs while stakeholders adapt their systems. Royal Mail has expressed similar concerns regarding customs complications and price implications, whilst Evri advocates for careful consideration of any modifications.

The debate intensified following President Trump’s decision to eliminate the $800 small package exemption in the United States. British retailers, including Sainsbury’s and Currys, fear this could redirect lower-quality goods to European markets. They argue the current system creates an unfair advantage for Chinese platforms like Shein and Temu over domestic retailers.

The British Retail Consortium has raised concerns about product safety and ethical standards, suggesting many imported items may not meet UK consumer expectations. According to HM Revenue & Customs data, the existing low-value goods regime generates £1.5 billion annually in supply VAT for the British government.

Amanda Francis, chief executive of the Association of International Courier and Express Services, warned that modifying the current system could exacerbate inflationary pressures by directly impacting consumer prices. The situation has already prompted DHL to temporarily suspend business-to-consumer shipments to the US exceeding $800 in value, creating additional challenges for UK brands targeting American customers.