Chancellor Rachel Reeves has confirmed that the UK’s controversial de minimis rule, which exempts parcels worth under £135 from import duties, will remain in place until March 2029, despite mounting pressure from British retailers for immediate action.
It was expected that the Chancellor would follow the lead of the US and EU and announce in Wednesday’s Autumn Budget that the de minimis rule had been scrapped.
The decision means low-cost overseas sellers such as Shein and Temu will continue to benefit from the tax break for at least four more years, prolonging what many in the British retail sector see as an uneven playing field.
Imports under £135 surged by 53% last year, reaching nearly £6bn in value, according to HMRC figures obtained by Sky. Next, Monsoon and Superdry are among the retailers that support the government taking action to close the tax loophole. Helen Dickinson, CEO of the British Retail Consortium, said: “It cannot come soon enough. The volume of potentially non-compliant goods entering the UK is growing exponentially and we encourage government to ensure this new policy is implemented as quickly as possible.”
Why the delay?
Logistics firms including Royal Mail, DHL Express and Evri have all raised concerns about the operational impact of scrapping the rule without adequate preparation. The Treasury appears to have bowed to this argument, claiming that an abrupt removal of the exemption could cause border disruption, snarl delivery operations, and increase costs for logistics providers. Officials point to similar chaos in the US when its own low-value exemption was scrapped earlier this year, and note that the EU is phasing out its €150 threshold gradually, with full implementation due in 2028.
The government expects the eventual removal to raise £500m annually, which will be directed toward public services and business support. However, critics are likely to argue that the delay leaves UK high streets exposed to unfair competition for a further four years, during a period of fragile consumer confidence and falling sales.
Industry reaction
Reeves will launch a consultation on new customs arrangements within weeks, with detailed proposals expected next year. It is expected that the UK will be introducing a phased approach, with a consultation on the design of the new customs arrangements to take place within weeks, followed by detailed proposals next year.
Retailers are calling for faster action, but Treasury officials insist that the long runway is necessary to avoid disruption and ensure compliance systems are ready.
A spokesperson for Temu previously told InternetRetailing that the company “categorically rejects any suggestion that our structure or operations are designed to avoid taxes or minimise our economic footprint in Europe.”
Stay informed
Our editor carefully curates two newsletters a week filled with up-to-date news, analysis and research, click here to subscribe to the FREE newsletter sent straight to your inbox and why not follow us on LinkedIn to receive the latest updates on our research and analysis.
