Tax crackdown on Shein and Temu could be fast-tracked as retailers turn up the heat

Ministers are weighing up whether parts of a clampdown on the low-value imports that power Shein and Temu could arrive sooner than planned, after sustained lobbying from British retailers who say the current timetable leaves the high street exposed.

The government confirmed last year that reform of the so-called de minimis regime, which lets goods worth less than £135 enter the UK without customs duties, would not be fully in place until 2029 because of the complexity of building a new customs system from scratch. Now, officials are understood to be examining whether elements of that reform can be brought forward while still keeping goods flowing freely at the border.

The consultation on the design of a replacement system closed in early March, and ministers are still working through the responses. For retailers who have spent the better part of two years arguing that the relief tilts the pitch against them, even that assessment period feels too slow.

The de minimis exemption has become one of the defining battlegrounds in the contest between established British retailers and the fast-growing overseas platforms snapping at their heels. Shein and Temu, both founded in China, have expanded rapidly in Britain by shipping low-cost goods directly from manufacturers to shoppers, sidestepping the duties and overheads that domestic firms shoulder when they import through conventional supply chains.

Names including Sainsbury’s, Currys and AO World have argued that the carve-out hands overseas rivals a structural advantage. It is an argument that has steadily gained volume, with UK retailers calling on the government to end China’s tax-free advantage and warning that the playing field has been tilted for too long.

The government has already said it intends to abolish the exemption, a position set out when Rachel Reeves moved to review the import tax loophole in its crackdown on cheap overseas goods. But it has insisted that a phased transition is needed to avoid disruption at ports and customs checkpoints. Officials say a new system for collecting duties on low-value parcels has to be built, in their words, “from the ground up” to cope with the sheer volume of packages arriving in the country, and that businesses moving and selling food will also need time to prepare. The full design is set out in the Treasury’s consultation on reforming the customs treatment of low-value imports.

The timetable has frustrated retailers, who have stepped up their lobbying in recent months. Last week Andrew Murphy, chief executive of toy seller The Entertainer, wrote to the government urging ministers to accelerate the reforms, describing the current schedule as “unacceptable”.

Industry groups have also warned that Britain risks becoming an outlier as other major economies move faster. The United States scrapped its own low-value import exemption last year, while the European Union is preparing to introduce a temporary customs duty on low-value parcels from next month before bringing in wider reforms, a shift confirmed by the European Commission’s taxation and customs directorate. The fear among executives is that, as doors close elsewhere, more low-cost and potentially unsafe goods will simply be redirected towards the UK, a concern that has already prompted warnings that delay risks turning Britain into a ‘dumping ground’.

The Treasury, for its part, is holding the line on both the destination and the pace. “The rapid growth in low-value imports is hurting our high streets and retailers,” it said. “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.

“This is a significant reform which 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.”

For Britain’s retailers, the principle is now settled. The fight, increasingly, is over the clock.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.