Ending the UK’s tariff exemption on low-value imports could drive up prices for consumers and create new pressures for small businesses, the British Chambers of Commerce (BCC) has warned, as it urged the government to take a phased approach to scrapping the “de minimis” rules.
The government plans to remove the customs duty exemption on imports worth less than £135, meaning these goods will become subject to tariffs. The reform is not expected to take effect until March 2029 at the latest, giving time for a new duty collection system to be built and for businesses to prepare.
The move would bring the UK more closely in line with global trading partners. The US scrapped its longstanding de minimis exemption in August, which previously allowed packages valued below $800 (£597) to enter the country tariff-free, while the European Union is also planning to remove its equivalent threshold and introduce handling charges for cheaper parcels.
Several UK retailers including Primark, Currys and Boohoo have backed the removal of the tax break, arguing that it has allowed overseas fast-fashion platforms such as Shein and Temu to undercut domestic retailers by shipping low-cost items directly to consumers without paying duties.
However, the BCC has cautioned that poorly designed reforms could have unintended consequences for businesses and shoppers.
Responding to the government’s technical consultation on the proposed changes, which closed on Friday, the business group said the UK should respond to the global trend of abolishing de minimis thresholds but warned that any reforms “must be proportionate”.
The organisation raised particular concerns about proposals that could introduce charges per item or per consignment. According to the BCC, such fees risk distorting business behaviour, disproportionately affecting smaller firms and increasing costs for consumers who rely on ecommerce deliveries for single-item purchases.
Survey data from the BCC suggests many businesses would struggle to absorb higher import costs. If costs on small shipments increased by between 5 per cent and 10 per cent, more than half of UK goods importers said they would pass those increases on to consumers. Only around a fifth said they would be able to absorb the additional costs themselves.
Businesses also indicated they would likely adjust their operations to mitigate the impact. Around 21 per cent said they would switch suppliers, while 20 per cent would consolidate shipments to reduce the impact of duties. A further 12 per cent said they would scale back activity, potentially reducing overall trade volumes.
The survey also highlighted a lack of awareness among businesses about the upcoming changes. Almost two-thirds of respondents said they were either unaware of the proposed reform or unsure whether it would affect them. Of the 608 companies surveyed, roughly 30 per cent identified themselves as importers.
The implications could also extend beyond imports. Just under a quarter of UK exporters said that if other countries removed their own de minimis exemptions and costs rose by between 10 per cent and 15 per cent, more than half of their overseas sales could be put at risk.
William Bain, head of trade policy at the BCC, said ecommerce plays a critical role in global trade and warned that poorly implemented reforms could feed directly into higher prices.
“Ecommerce matters greatly to the UK economy and global trade,” he said. “We know the trend globally is to abolish de minimis thresholds and levy duties on low-value imports given their huge growth in recent years.
“But we would urge ministers not to introduce charges per item or consignment by import. Our research shows the increased costs will feed through into higher prices.”
Bain added that the government should maintain the current system of charging VAT at the point of sale for these purchases and ensure any removal of the de minimis exemption is carefully phased in, avoiding flat-rate fees and focusing instead on targeted enforcement.
The government has defended the planned reform, arguing that the rapid growth of low-value imports has created an uneven playing field for domestic retailers.
An HM Treasury spokesperson said: “The rapid growth in low value imports is hurting our high streets and retailers. This is a significant reform which backs our businesses to compete and grow, controls safety and flow of goods at our border, and keeps the UK in line with our international partners.”
The government has said the changes will not come into force before 2029 because a new duty collection system must be built to handle the growing volume of low-value shipments entering the UK each year.
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