Initially announced in Budget 2025, the reforms include the removal of customs duty relief on low value imports, meaning items valued at £135 or less will be subject to customs import duties.
The move is intended to address competitive pressures on high street retailers, who have long argued they are disadvantaged against online sellers. It is part of a broader package of tax and customs measures focused on making the system “fairer, simpler and digital first”.
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According to HMRC, the reforms aim to “ensure fairer competition between high street and online retailers”.
Ministers have also opened a review on the collection of VAT via online marketplaces, seeking feedback on whether expanding existing rules could better enforce compliance.
“This action tackles the unfair competition and dodgy businesses that are doing real damage to our high streets,” commented Treasury exchequer secretary Dan Tomlinson.
“And by making sure that tax is paid when it’s owed, we can raise revenue to put back into improvements to the business rates system for pubs, restaurants, hotels and other high street businesses.”
“Unfair playing field against importers”
Responding to the announcement, the British Retail Consortium (BRC) says the changes are insufficent.
Helen Dickinson, chief executive at BRC, said a three-year timeline for the low-value import reforms is “too long” and bringing the changes forward by six months “does not go far enough”.
“UK retailers cannot afford to compete on an unfair playing field against importers not paying tariffs. While we recognise the practical challenges involved, we are keen to work with government to explore solutions that could enable the changes to be introduced sooner.”
The BRC has expressed support for stricter VAT enforcement via online marketplaces and highlighted the need to drive compliance amongst all businesses operating in the UK.
“There is clear evidence that some unscrupulous overseas sellers are exploiting loopholes to avoid paying the VAT they owe, undercutting responsible businesses who play by the rules,” Dickinson added.
“As government consults on how to tackle this, any reforms must drive compliance, protect consumers and avoid adding unnecessary burdens for legitimate sellers and marketplaces.”
Some high street brands have reportedly expressed dissatisfaction with the government’s timetable, calling it “unacceptable”.
George Weston, chief executive of Primark parent group Associated British Foods, told Sky News: “This is so dispiriting. A system that the government itself recognises damages UK high streets and loses the exchequer hundreds of millions in potential revenue is being left in place for two more years.”
