The UK government has announced it will close a tax loophole on small parcel imports six months earlier than originally planned, but retail leaders have condemned the revised timeline as still too slow. The change, now set for October 2028, aims to level the playing field between high street shops and overseas online retailers.
Current Rules and Proposed Changes
Under existing regulations, overseas retailers can send parcels valued under £135 to UK customers without paying any import duties. This has been criticised for giving foreign e-commerce firms an unfair advantage over domestic businesses that must comply with VAT and customs rules. Last year, Chancellor Rachel Reeves confirmed a review of the loophole, initially proposing reforms by 2029. On Tuesday, the Treasury said it would accelerate the removal of the customs duty relief to October 2028, following industry consultations. The government stated the changes would “ensure fairer competition between high street and online retailers.”
Retailers React
Despite the accelerated timetable, retail executives have expressed frustration. George Weston, chief executive of Associated British Foods (ABF), the parent company of Primark, said: “This is so dispiriting. A system that the government itself recognises damages UK high streets and loses the exchequer hundreds of millions in potential revenue is being left in place for two more years. If the government expects to be seen as serious about rejuvenating town and city centres and preserving UK jobs, then ministers must examine how this unacceptable timeline can be accelerated and show more support for UK retail.”
Helen Dickinson, chief executive of the British Retail Consortium (BRC), added: “While the Government has rightly recognised that a three-year timeline for implementing low-value import reforms is too long, bringing it forward by just six months does not go far enough. UK retailers cannot afford to compete on an unfair playing field against importers not paying tariffs.”
Broader Tax Reforms
The small parcel duty change is part of a wider package of tax policy updates. The Treasury also launched a review of how VAT is collected for business trading through online marketplaces, aiming to address further tax avoidance in the digital economy. The government has not yet provided details on how the reforms will be enforced or what impact they will have on consumer prices.
