The “de minimis” rule in the UK means that overseas retailers do not have to pay import duties on shipments worth less than £135. Parcels above that value can incur customs levies of up to 25%. More than 1.6 million parcels enter the country every day using the current tariff exemption.
It is a bugbear for many UK retailers who say ultra-fast fashion firms like Shein and Temu benefit through flooding the market with cheap imports, resulting in an uneven playing field.
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The UK had, earlier this year, agreed to a review of the De Minimis Loophole, shortly after the US announced it was scrapping the trade benefit entirely.
Following the review, the UK Treasury says it will eliminate the benefit but not until at least March 2029, according to The Times.
“I’m backing Britain’s high streets and the businesses that power them,” Reeves said. “It’s time to make sure our local shops can compete fairly with overseas sellers and keep driving growth and good jobs across the UK.”
Reeves has decided to phase out the exemption gradually rather than immediately amid concerns that scrapping it straightaway could clog up borders and create chaos for brands and logistics providers.
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By GlobalDataThe chancellor is now planning to launch a consultation on how to design and implement the new customs arrangements for low-value imports, with detailed proposals expected in the coming months.
In an open letter to the UK Government following the decision, Steven Bethell, founder of Bank & Vogue and co-founder of Beyond Retro, called for immediate action to address the devastating impact of the de minimis rule, which he said “allows ultra-fast fashion companies to flood the UK market with untaxed, unregulated, and unsustainable clothing.”
“We are keen to compete,” Bethell writes, “but it has to be on a level playing field. Those of us who are paying taxes, following the rules, and investing in sustainable fashion innovation are being placed at a clear disadvantage.”
Bethell highlights the knock-on effects across the entire fashion ecosystem – from small businesses to charitable organisations that rely on second-hand clothing sales to fund critical community support.
“So many amazing charities across the UK raise funds through second-hand clothing,” he continues. “As ultra-cheap fashion floods the market, these charities are being pushed out – and with them, the essential social programmes they sustain.”
Beyond the economic and social harm, Bethell draws attention to the hypocrisy and misinformation being spread by some ultra-fast fashion companies that are funding campaigns designed to discredit the global second-hand clothing trade. “It is shocking that companies that avoid paying taxes are now financing multi-million dollar lobbying efforts — disguised as charity — to undermine the circular economy,” he writes. “They are hurting businesses, hurting charities, and hurting the very people those charities exist to help.
“This is not just about fairness in trade. It’s about the integrity of our fashion system, the survival of our charities, and the future of a circular economy built on responsibility and reuse.”
