Chancellor Rachel Reeves is reportedly set to close a tax loophole in her upcoming budget that allows overseas retailers like Shein and Temu to send small packages to the UK without paying customs duties. The move follows complaints from British high street chains that the arrangement creates an uneven playing field.
Currently, parcels worth up to £135, known as 'low-value imports', can enter the UK duty-free, while goods above that threshold incur duties of up to 25%. Experts estimate the loophole costs the industry up to £600 million annually. Reeves had signalled a review of the policy in April, following similar actions by the US and EU.
Major UK retailers including Next, Sainsbury's, Currys, JD Sports, and Superdry have urged the government to act. JD Sports chair Andy Higginson called for a 'level playing field', stating there is a moral case for paying tax in the UK. The British Retail Consortium warned that foreign sellers using the rules expose consumers to unregulated, potentially unsafe products.
The value of small parcels from China to the UK has more than doubled to about £3 billion in 2024-25, according to the BBC. The US abolished its equivalent exemption this summer, and the EU tightened controls in July, with customs duty expected from 2028. Concerns have been raised that low-cost Chinese products could be dumped in the UK if it does not follow suit.
A government spokesperson confirmed that the chancellor is reviewing the customs treatment of low-value imports after listening to concerns from British retailers.
