UK May Lower Tax-Free Threshold from £135 to £40: What It Means for Shoppers
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The UK’s tax-free import policy for goods under £135 is under review, with potential changes that could significantly impact online shoppers. The UK Treasury has announced a comprehensive reassessment of low-value import taxation, focusing on the current £135 duty-free threshold. This policy, in place for over a decade, has been criticized for creating “unfair competition” between international e-commerce platforms like AliExpress, Temu, and Shein and local retailers.
Why Is the UK Changing the Tariff Threshold?
Currently, the UK exempts imported goods valued below £135 from duties, a system that has fueled the rapid growth of cross-border e-commerce. In 2023, the UK received over 100 million small overseas parcels, with more than 60% coming from platforms like AliExpress, Temu, and Shein.
Local retailers argue that the “zero-tariff” policy has flooded the market with cheap Chinese goods, reducing foot traffic in physical stores. The UK’s Trade Remedies Authority is now reviewing whether to lower the threshold to £40. If implemented, imported goods below this value could face:
- A 20% VAT
- Up to 25% import duty
- An overall 20-30% price increase
According to the British Home Enhancement Products Association, fast-moving consumer goods imported under this policy reached £1.2 billion in 2024 alone.
European Trends and Global Trade Protectionism
The UK isn’t alone in reconsidering low-value import policies:
- France plans to introduce a fixed fee for small Asian parcels starting in 2026.
- The European Union will remove tax exemptions for goods under €150 by 2028.
- The U.S. recently scrapped its T86 tariff exemption for low-value shipments.
These moves reflect a growing trend toward trade protectionism, making cross-border e-commerce more costly.
What’s Next for UK Shoppers and E-Commerce?
The UK Treasury has announced a six-month transition period if changes are approved. Cross-border e-commerce platforms may need to adjust their pricing and logistics strategies. While Temu and Shein haven’t officially responded, analysts warn that some budget goods could disappear from the UK market if tariffs rise.
Key Takeaways:
- The UK may lower the tax-free threshold from £135 to £40.
- Imported goods could become 20-30% more expensive.
- The change aligns with EU and U.S. trade policy shifts.
- Online shoppers may see fewer ultra-low-cost options.
For official updates, refer to the UK Government’s Trade Policy and EU Customs Reform.
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Disclaimer:
The information provided in this article is for general informational purposes only. While we strive to ensure accuracy, tax and trade policies are subject to change. For the latest updates and official guidance, please refer to the UK Government’s Treasury Department and HM Revenue & Customs (HMRC). This article does not constitute financial, legal, or professional advice.
