A coalition of Britain’s largest retailers has called on the Government to expedite reforms to import tax exemptions that they argue give overseas online sellers an unfair competitive advantage. In a letter addressed to the Prime Minister and Chancellor, companies including Asos, Marks & Spencer, Primark, and Next propose a £2.60 charge on each small parcel shipped to the UK.
Loophole Under Fire
The high street firms have criticised the so-called “de minimis” threshold, which currently allows overseas retailers to send parcels valued under £135 to the UK without paying import duties. This exemption, they contend, creates a “structural advantage” for foreign retailers without a physical presence in the UK, undermining domestic businesses that employ millions, pay local taxes, and comply with import duties.
Chinese e-commerce giants Shein and Temu have leveraged this loophole to rapidly expand their UK customer base, offering vast selections of fashion and homeware at low prices. Their growth has intensified pressure on British retailers already grappling with rising costs and shifting consumer habits.
Government Plans and Delays
Chancellor Rachel Reeves announced in the 2025 autumn budget a review of the customs loophole, pledging to “support a level playing field in retail.” However, the proposed reforms are not expected to take effect until 2029, a timeline the retailers deem too slow.
International precedents are accelerating change. US President Donald Trump last year eliminated exemptions for low-value imports, which previously allowed parcels under $800 (£595) to enter duty-free. The European Union is also tightening rules, removing duty-free status for parcels under €150 (£112) and considering a €3 (£2.23) per-item charge.
Impact on UK Market
The industry letter warns that since the US changed its rules, overseas retailers have “immediately switched focus” to the UK and EU, exacerbating the disadvantage for British retailers. The UK is becoming an outlier, with a growing share of low-value imports (LVI) directed into its market, the letter states.
The retailers propose a temporary £2.60 flat fee on each parcel shipped to the UK, which they estimate could raise £1.7 billion annually for the government. This measure, similar to the EU’s proposed charge, could be implemented quickly and serve as a stopgap until broader reforms are enacted.
Additional Benefits
Beyond leveling the playing field, the retailers argue that closing the loophole would encourage consumers to spend at UK-based retailers and improve product safety checks. Many small parcels from overseas sellers bypass domestic safety regulations, raising concerns about counterfeit goods—such as fake beauty products—flooding the market.
Other signatories to the letter include Currys, Halfords, Kingfisher, Argos, New Look, and George at Asda, reflecting widespread concern across the retail sector.
