Budget Announcement Draws Mixed Reactions
Chancellor Rachel Reeves has faced significant backlash for her failure to immediately abolish a controversial tax loophole that predominantly benefits Chinese 'fast fashion' corporations. During her Budget presentation on Wednesday, Ms Reeves committed to supporting a level playing field in retail by eliminating customs duty relief for low-value imports, a move long demanded by British retailers.
The De Minimis Rule and Its Impact
Currently, the 'de minimis' rule allows overseas retailers, including giants like Shein and Temu, to send small parcels valued under £135 to the UK without incurring any import duties. British high street stalwarts such as Next, Superdry, and Primark have vehemently criticised this policy, arguing it creates an unfair advantage that enables international competitors to severely undercut them on price.
While the Chancellor's announcement to scrap the relief was initially welcomed, enthusiasm quickly dampened when the Treasury's accompanying documents revealed the change might not be fully implemented until March 2029 at the earliest. The government stated it would first consult on the 'technical detail' of the new import arrangements.
Mounting Pressure for Swift Action
The British Retail Consortium (BRC) has expressed profound disappointment with the proposed timeline. They highlighted that 1.6 million parcels now arrive in the UK daily, a figure that has doubled from the previous year. The value of these small packages has skyrocketed, rising by 53% to an estimated £5.9 billion last year, up from £3.9 billion.
In a strong statement, the BRC said, 'While we welcome the decision... the proposed timeframe is simply too long.' They pointed out that the US has already removed its similar threshold, with the EU set to follow suit next year, and urged the Chancellor to take decisive action as fast as possible.
This delay, critics argue, not only hinders fair competition but also continues to expose British consumers to goods that may not meet the UK's stringent environmental and ethical standards. Silvia Rindone, UK and Ireland retail lead at EY, noted that while closing the loophole is a positive step, it could lead to higher online prices, potentially causing consumers to reassess their buying habits.
