De Minimis Delay Risks Turning UK Into a ‘Dumping Ground’, Retailers Warn

Britain risks losing yet more high street shops, and becoming a dumping ground for unsafe imports, unless ministers move faster to close a tax loophole being exploited by overseas sellers, retailers have warned.

Andrew Murphy, chief executive of The Entertainer, the toy chain that trades from more than 150 stores, has voiced “grave concern and profound frustration” at the government’s plan to wait until 2029 before scrapping the £135 “de minimis” customs threshold.

The rule lets overseas sellers, among them the Chinese ecommerce giants Temu and Shein, ship parcels worth less than £135 into the UK without paying customs duties. British retailers importing goods in bulk, by contrast, must pay duties, VAT and compliance costs on every consignment. It is a structural disadvantage that domestic players have been pressing the government to end for months.

In a letter to ministers seen by The Times, Murphy branded the timetable an “unacceptable delay to reform”, arguing that it “extends by years the existence of an uneven playing field with respect to foreign marketplace sellers”. The postponement, he wrote, was “wholly indefensible and deeply damaging to UK retailers in an era already characterised by extreme economic challenge for the sector”.

The intervention lands shortly after Temu was fined €200 million by the European Commission, which found the platform had allowed the sale of illegal and unsafe products, including dangerous baby toys and defective phone chargers. The penalty, the largest yet handed down under the EU’s Digital Services Act, followed regulators’ conclusion that Temu had failed to properly assess the systemic risks its marketplace posed to consumers. The Commission set out its findings in detail, noting that a mystery-shopping exercise found phone chargers failing basic electrical safety standards and baby toys carrying medium-to-high safety risks. Temu has rejected the assessment.

Platforms such as Shein and Temu have expanded rapidly in Britain by selling very cheap products shipped directly from manufacturers. Their rise has drawn complaints from domestic retailers, among them Sainsbury’s, Currys and AO World, who argue the tax treatment hands overseas rivals an unfair advantage. The growing pressure prompted the Chancellor to order a review of the loophole last year.

The government confirmed last year that it would abolish the de minimis exemption, but not until 2029. Ministers say a gradual transition is needed to avoid the border disruption and customs delays seen in the United States after it removed its own exemption for low-value imports.

Murphy pointed out that the US abolished its $800 exemption last August, and that the European Union will introduce a temporary customs duty on low-value parcels from next month ahead of wider reforms. “The UK, by contrast, will not even begin imposing duties until some time in 2029,” he wrote, warning that Britain risked becoming an “ecommerce dumping ground” as sellers diverted goods away from markets where tighter rules were taking hold.

He cited research by the British Toy and Hobby Association (BTHA), which has been buying and testing toys from online marketplaces since 2018. In its latest investigation, 86 per cent of around 90 toys bought from seven marketplaces, including Temu, Shein, Amazon, eBay and TikTok Shop, failed safety tests, with a further 4 per cent breaching UK labelling standards. Murphy said the loophole had become a “route by which unsafe goods can and do enter the UK” and reach the public.

Geoff Sheffield, chairman of the Toy Retailer Association, said non-compliant products were “a major concern for all our members, from the largest multinationals to the smallest independent shops”. Such toys, he added, “not only put children at risk of harm and damage the reputation of the entire industry, but they undercut genuine UK toy retailers”. The government, he said, needed to “accelerate the legislation to prevent more of our members disappearing from the UK high street”.

The warning comes against a grim run for big toy retailers. Toys R Us closed more than 100 shops after collapsing into administration, while Hamleys, Woolworths and Mothercare have all shut stores over the years, part of a longer roll-call of familiar names that have vanished from the high street.

Helen Dickinson, chief executive of the British Retail Consortium, said faster reform was needed to protect more businesses. “Every day the government delays introducing a new customs system for low-value imports is another day that harms British businesses,” she said. “With the US and EU already moving quickly to close this loophole, the UK stands alone, increasing the risk that even more goods could be dumped on our market.”

A Treasury spokesman said: “The rapid growth in low-value imports is hurting our high streets and retailers. We are removing the customs duty relief for low-value imports and reforming the way these goods are declared into the UK to ensure all goods are appropriately controlled.” The reform, he added, “backs our businesses to compete and grow, controls safety and flow of goods at our border, and keeps the UK in line with our international partners”.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.