What’s changing?
The UK government has announced in Tax Update 2026 that it will bring forward changes to the VAT and duty relief regime on “low-value imports” (current relief for goods valued under £135) by six months, meaning the removal will now take effect in October 2028 at the latest. (gov.uk)
Who is affected?
- E-commerce platforms shipping direct to consumers in the UK from overseas.
- UK retailers competing with imported goods that currently benefit from reliefs.
- Any business involved in cross-border trade of small parcels or goods under £135.
Why this matters
- Costing & pricing: previously duty relief meant the landed cost excluded duty; businesses will need new pricing models.
- Customs & classification: the change exposes more items to customs duty and aligns UK with EU rules under the “Customs Reform” programme. (gov.uk)
- Cashflow impact: duty and VAT on small shipments could impact margins and require working capital adjustments.
Steps to get ready
- Review imported products: Which items you import under £135? Determine the future duty/VAT exposure.
- Update pricing models: Ensure consumers are aware of duty/VAT inclusions or exclusions; possibly adjust shipping or handling fees.
- Collaboration with marketplaces: For online platforms, understand how marketplace liability is evolving and the shift of responsibilities. (gov.uk)
- Supply chain audit: Are there customs intermediaries you rely on that may change in cost or availability? Think ahead.
Real-world example
- A small clothing retailer in UK imports low-cost accessories (e.g. under £135) via marketplace from overseas. Post-October 2028, each shipment will incur VAT & possibly duty under the new rules.
- An online marketplace may need to change terms with overseas vendors to adjust who collects VAT and duty from consumers.
Key takeaways
- Expect legal obligation changes from October 2028 at the latest; there will be a consultation beforehand if not already completed. (gov.uk)
- Businesses should budget for increased compliance costs and educate customers/supply partners.
- Maintaining competitiveness will require transparency and efficiency in managing the new cost burdens.
Bottom line: The removal of low-value import relief significantly reshapes the cross-border trade landscape. Early planning is vital to stay ahead and protect margins.