UK confirms end of customs duty relief for low-value imports

The UK government has confirmed the next stage of reforms that will remove customs duty relief from low-value imports worth £135 or less.

HM Treasury published its response to a consultation on 13 July, confirming decisions covering customs arrangements, tariff treatment, potential fees, VAT collection and implementation.

Low-value goods entering the UK currently qualify for customs duty relief, although VAT has generally applied under reforms introduced in 2021.

The government previously committed to removing the relief by March 2029 at the latest, following a sharp increase in the volume of small consignments entering the country.

The consultation examined how customs data should be collected, how tariffs should be calculated and whether an additional fee should apply to fund the cost of administering the new system.

It also considered how VAT collection should interact with the revised customs arrangements.

The reforms will affect overseas sellers, e-commerce marketplaces, postal operators, express carriers, customs intermediaries and UK businesses competing with direct-to-consumer imports.

Removing the relief means low-value consignments will increasingly be treated in line with other imported goods, increasing the importance of accurate classification, origin and product-level data.

For marketplaces and logistics providers, the changes may require new systems for collecting customs information and calculating duties before goods reach the UK border.

For merchants, additional duty and administrative costs could affect pricing, margins and decisions over whether to ship individual parcels or hold inventory within the UK.

The working capital impact may be particularly relevant for high-volume sellers operating on narrow margins, where small changes in import costs can materially affect cash requirements across large numbers of transactions.

The outcome follows the European Union’s introduction of a temporary €3 duty on low-value e-commerce consignments earlier in July, reflecting wider moves by major markets to tighten customs treatment of direct-to-consumer imports.

HM Treasury said legislation and detailed implementation guidance will follow as the new UK arrangements are developed.

The reform creates a longer transition period, but businesses involved in low-value e-commerce will need to prepare for more detailed customs data, additional charges and a materially different import model.