The decision by the UK government to impose customs duties or remove customs exemptions on low value e commerce parcels has been welcomed by retailers. However, the postponement of the regulation to 2029 is considered a delayed step. Local retailers state that they face a significant disadvantage when competing with low cost China based e commerce platforms and are calling for an acceleration of the process.
The UK Treasury announced that the customs exemption applied to products under 135 pounds (179 dollars) will be lifted no later than March 2029. However, retailers are not satisfied with the announced date. The CEO of the British Retail Consortium, Helen Dickinson, said that this date is “unacceptably late.” Citing government data showing that 1.6 million parcels benefit from this exemption every day, nearly twice as many as last year, Dickinson said, “Businesses cannot afford any further delay.”
Low cost platforms such as Temu, Shein, AliExpress and Amazon’s new service Amazon Haul benefit from the exemption by sending products directly from factories in China. This increasingly causes local retailers to fall behind in price competition.
Customs Exemption: The US and EU Move Faster
Customs exemption policies for low value parcels are changing rapidly between countries in global trade. Although the United States is the largest market for Shein and Temu, it removed the “de minimis” exemption for packages under 800 dollars for products coming from China and Hong Kong in May, and then abolished it entirely in August.
The European Union took a similar step, bringing forward its plan to eliminate the customs exemption for parcels under 150 euros from 2028 to 2026. South Africa began applying VAT on low value parcels last year, while Brazil introduced a 20 percent tax on international purchases under 50 dollars. The trend is clear worldwide: countries are narrowing or eliminating exemptions to protect local retailers.
Will the Price Gap Narrow
According to experts, the removal of the customs exemption will increase costs for international e commerce companies that ship directly to consumers. Andrew Thurston, Senior Customs Duty Manager at MHA, stated, “This regulation may reduce the price gap between online platforms and local stores. This could encourage consumers to return to UK retailers.”
Dan Finley, CEO of Debenhams Group, which owns Boohoo, argued that delaying the implementation “means billions of pounds in potential tax loss for the UK.” Boohoo has experienced significant declines in sales in recent years due to Shein’s aggressive growth. Similarly, Argos, owned by Sainsbury’s, said the timeline is too late and that the UK could become an “outlier” in international trade.
Rapid Implementation Requested Against Fast Growing, Low Cost Global E Commerce Platforms
While the UK government’s move to remove the customs exemption is seen as an important step toward protecting local retailers, industry representatives believe that postponing the regulation until 2029 will increase economic losses and weaken the country’s position in international competition. A faster implementation is being requested so that the UK retail sector can remain strong in the face of rapidly growing low cost global e commerce platforms.
