Tax Planning
What High Street & E-commerce Businesses Must Know About the June 2026 Cheap Imports Reforms
Goods under £135 sold online will face import duties sooner than expected along with changes to VAT and land VAT relief reforms. Businesses should act now to avoid surprises.
By NomadicTax Research Team • 5-8 min read • June 25, 2026
## Background to the Reforms
On **23 June 2026**, the UK government announced a package of tax and customs changes aimed at supporting high street businesses and ensuring **digital-first fairness** in competition with online retailers. Key among these is bringing forward reforms that remove customs duty relief for “low-value imports” (LVIs). ([gov.uk](https://www.gov.uk/government/news/government-backs-high-street-with-acceleration-of-cheap-import-reforms-and-crackdown-on-dodgy-online-sellers?utm_source=openai))
Previously, imports below £135 were exempt from customs duty—but this relief will be scrapped **six months earlier**, with the new commencement date now **October 2028**. This change aims to level the playing field between UK shops and overseas online sellers who benefit from this relief. ([gov.uk](https://www.gov.uk/government/news/government-backs-high-street-with-acceleration-of-cheap-import-reforms-and-crackdown-on-dodgy-online-sellers?utm_source=openai))
Other important components:
- A consultation is underway on how VAT are collected for businesses operating through online marketplaces, potentially changing who is liable for VAT in certain sales. ([gov.uk](https://www.gov.uk/government/news/government-backs-high-street-with-acceleration-of-cheap-import-reforms-and-crackdown-on-dodgy-online-sellers?utm_source=openai))
- Reforms to VAT on sale of land to help speed up affordable home building by focusing relief on land used in social housing. ([gov.uk](https://www.gov.uk/government/news/government-backs-high-street-with-acceleration-of-cheap-import-reforms-and-crackdown-on-dodgy-online-sellers?utm_source=openai))
## Implications for Businesses
- **Import-heavy e-commerce firms** will now face **customs duty costs for items under £135** starting from October 2028—reducing margin advantage. Businesses must reprice or rethink sourcing to adapt profitability.
- **Online marketplaces** may see changes in how VAT is collected or passed through; business models might need adjustment, especially if marketplaces become liable rather than the seller.
- Developers or housing providers dealing with land will benefit if reliefs are refocused on social housing projects. This could impact project cost assumptions and pricing.
## Steps to Take Now
1. **Review your product range**
- Identify which items currently benefit from the LVI relief—build cost models without that benefit.
2. **Talk to your supply chains**
- Seek local sourcing or UK-based alternatives.
3. **VAT registration and collection**
- Understand current marketplace VAT rules; monitor the consultation to see if responsibility shifts. Determine if your business needs to be registered for VAT earlier.
4. **Land projects planning**
- If involved in affordable housing, check whether your projects qualify for the new VAT relief focus. Note possible savings.
5. **Price strategy**
- Anticipate increased costs; can you absorb them, or do customer prices need adjustment?
## Example Use Case
*Online retailer “Global Gadgets Ltd”* currently ships low-value gadgets (valued at £100) from overseas. Under old rules, no customs duty applies until 2028. With the reforms brought forward, starting October 2028, duties apply. They must rework pricing, potentially add £10–£15 duty per unit, or consider holding inventory in UK or EU to avoid import duty.
Meanwhile, *Affordable Homes Developer Ltd* is building social housing estates and planning land purchases. If their land qualifies under the new focused VAT relief, input VAT or land VAT could be reduced, speeding approval and cutting development costs.
## How to Track the Changes
- Monitor HMRC / Treasury publications of the consultation on online marketplace VAT collection.
- Keep full records of contracts, terms of sale and import values preceding October 2028.
- For land and property sales, track legislative updates specific to VAT relief on land.
## Conclusion
The accelerated removal of low-value import exemptions signals a push towards fairness and updated trade-tax alignment. High street competitors stand to gain, but online sellers must adapt now—revising supply chains, pricing, and VAT compliance. Land-based and housing-focused businesses will benefit in certain cases but should plan carefully to ensure they meet eligibility under the reformed VAT relief framework.