UK Budget signals end of ‘de minimis’ tax loophole for low value imports

What is the de minimis rule? 

Under current rules, parcels worth £135 or less avoid UK customs duty through a simplified import process, though VAT is usually collected by the overseas retailer at the point of sale. While convenient for consumers, the exemption has drawn criticism for giving overseas retailers a pricing advantage and allowing potentially non-compliant products to enter the market. 

What the Government has signalled

Although the exemption will not be removed overnight, the intention is that the de minimis rule will be phased it out. Industry sources suggest that full implementation may not come into effect until 2029, giving retailers, logistics operators, and HMRC time to adapt. 

Ending the de minimis exemption is a significant step for UK retailers. It helps create a level playing field by addressing the long-standing concern that ultra-cheap overseas parcels distort competition. 

It also strengthens compliance and consumer safety, ensuring imported goods meet UK standards, and is expected to generate hundreds of millions of pounds in additional revenue for the Treasury. 

The Government plans a gradual removal of the exemption, supported by further HMRC guidance on low-value imports. While shoppers will still be able to take advantage of lower-value overseas purchases in the short term, the move signals a major shift in the online retail landscape over the coming years.

Adam Norman, Audit & Assurance Partner, Price Bailey

Ending this measure brings us into line with the EU, so UK exporters will have to account for duty on their supplies to customers overseas.

It does challenge cheap imports, however will also mean that small imports for UK businesses (parts, accessories, etc.) will also be brought into the customs duty fold.

Greg Mayne, VAT Partner, Price Bailey