The UK Will Abolish Low-Value Import Duty Relief

On 26 November 2025, UK Chancellor Rachel Reeves formally announced in the Autumn Budget 2025 that the government will abolish the customs duty relief for Low Value Imports (LVI) — the long-standing rule that exempts parcels valued at £135 or below from import duties.

This marks the end of an era for low-cost direct shipping into the UK, particularly for Chinese cross-border e-commerce exporters whose business models rely heavily on the “low-value parcel, no-duty” mechanism.

This article breaks down the policy details, the rationale behind the reform, the implementation timeline, and its expected impact on global sellers. We also outline practical steps companies should take now.

1. What Is the UK’s Low-Value Import Duty Relief?

Under current rules, a parcel:

• valued at £135 or below,

• shipped via postal services, express delivery, or cross-border e-commerce channels,

• is exempt from customs duties.

This mechanism — known as “de minimis duty relief” — significantly lowers the cost of shipping inexpensive products to UK consumers.

Although VAT must still be paid, the lack of import duty has enabled Chinese fast-fashion, beauty, accessories, and other low-ticket items to remain extremely price-competitive.

👉 This rule has been a foundational pillar for platforms such as Temu, Shein, and many DTC exporters.

2. Why Is the UK Abolishing the LVI Duty Exemption?

The government provides four main reasons:

• Significant revenue loss

Millions of parcels under £135 enter the UK each month. Under-valuation and parcel splitting have created sizeable gaps in customs revenue.

• Unfair competition for local retailers

UK retailers — like Next, Primark, Argos — have long complained:

• They must pay customs duties, VAT, business rates, and local labor costs

• Overseas sellers benefit from duty-free small parcels

The government views LVI relief as distorting fair competition.

• Rapid surge in small parcels from overseas

Between 2020 and 2024, the volume of China-origin parcels entering the UK rose by nearly 300%, overwhelming border capacity and complicating safety checks.

• Strengthening domestic consumption and local supply chains

Removing the exemption aligns with the government’s broader goals:

• Protect local retail

• Increase tax transparency

• Support UK warehousing and logistics industries

3. Autumn Budget 2025 Makes It Official

The consultation text states:

“From March 2029 at the latest, low value imports will no longer receive duty relief.”

In plain terms:

By March 2029, every parcel entering the UK — regardless of value — will be subject to customs duty.

This effectively launches the countdown to the end of the LVI regime.

4. Implementation Timeline: A Gradual Transition

The UK will not switch overnight. The transition is structured as follows:

• November 2025 — Reform announced (completed)

Public confirmation via the Autumn Budget.

• November 2025 – March 2026 — Public consultation period

Businesses, platforms, and industry groups may submit feedback.

• 2026–2028 — Design and testing of the new customs system

This includes:

• new customs processes

• simplified tariff buckets for low-value goods

• updated declaration requirements

• data standards

• a possible implementation grace period

  By March 2029 — Full abolition of LVI duty relief

This is the latest legal deadline.

5. Industry Impact: A Structural Shock to Cross-Border E-Commerce

This reform is expected to reshape global e-commerce supply chains, especially for Chinese exporters.

• Sharp increase in costs

Once duty applies to low-value goods, sellers must pay:

• customs duty

• administrative / processing fees

• increased customs declaration costs

Low-margin products will be hit especially hard.

• Decline of direct-from-China small parcel shipping

Companies may need to transition from:

• Direct shipping → Bulk import → UK local distribution (UK warehouses).

This raises capital requirements and operational complexity.

6.Major platform strategy shifts

Platforms that rely on LVI — such as Temu and Shein — may need to:

• increase UK warehouse capacity

• restructure pricing

• raise seller fees

• reduce the number of ultra-low-price SKUs

• Higher compliance burden

This includes:

• tariff classification (HS codes)

• customs valuation

• declaration obligations

• cross-border tax audits

• crackdown on under-valuation

The days of “light-touch” cross-border e-commerce are ending.

7.What Should Cross-Border Sellers Do Now?

• Recalculate SKU profitability for the UK market

Account for duty, admin fees, and higher logistics costs.

• Begin evaluating UK or EU warehouse solutions

Direct small-parcel shipping will become increasingly unviable after 2026–2029.

• Adjust product strategy Prioritize:

  higher average order value

  higher-margin SKUs

  better inventory planning

• Participate in the consultation process

Submit industry feedback to HM Treasury before March 2026.

Large platforms will certainly participate — brands should too.

8.Conclusion: The Next Phase of Cross-Border E-Commerce

The abolition of the LVI duty exemption is one of the most consequential policy shifts for global e-commerce in the past decade.

It signals the transition from:

• price-driven, subsidy-powered direct shipping
  to

• integrated, compliant, locally optimized supply chains.

Companies that adapt early — by restructuring logistics, adjusting SKU mixes, and strengthening compliance — will be best positioned to thrive in the post-LVI landscape.