The United Kingdom is preparing to overhaul its cross-border import tax policy. According to the Financial Times and other major outlets, Chancellor Rachel Reeves plans to announce the removal of the import duty exemption for packages worth £135 or less in the national budget on November 26.
The End of the £135 Import Package Rule
Currently, goods valued at under £135 shipped to the UK are exempt from customs duties. This rule has allowed major cross-border e-commerce platforms such as Shein and Temu to ship low-cost items directly to British consumers.
However, the UK government now views this exemption as a significant tax loophole, reportedly costing the Treasury around £600 million per year. Ending the rule aims to recover lost revenue and level the playing field between local and overseas sellers.
Domestic Retailers Call for a Fairer Market
For months, British retailers including Next, Sainsbury’s, and Currys have criticized the policy. They argue that allowing foreign platforms to bypass import duties has distorted competition and hurt local businesses.
While UK companies must charge VAT and import fees, foreign sellers can offer cheaper prices due to the current exemption. As a result, domestic retailers face increasing pressure, especially during economic recovery when profit margins are already thin.
Impact on Shein, Temu, and Cross-Border Sellers
The policy shift could have a major impact on cross-border e-commerce platforms. Companies like Shein and Temu rely heavily on the low-value import channel to maintain their price advantage in international markets.
Once the exemption is removed, these platforms may need to adjust pricing, logistics, or tax strategies to stay competitive. Additionally, customers could see slightly higher prices on low-cost items imported from overseas, especially in the fast fashion and household goods categories.
A Step Toward Tax Fairness
Although the move may raise consumer costs in the short term, many experts believe it represents a necessary correction in the UK’s import system. It reflects the government’s intent to strengthen domestic retail, close tax loopholes, and build a fairer trading environment for all businesses.
Still, this decision may also spark new debates about how Britain balances consumer affordability with economic fairness in a post-Brexit world.
