By March 2029, every parcel shipped to the UK from abroad — no matter how small or cheap — will pay customs duty. The change, announced by Chancellor Jeremy Hunt on April 15, 2025, marks the end of a four-year exemption that let online sellers bypass taxes on goods under £135. It’s a direct response to years of frustration from British Retail Consortium (BRC), which represents over 500 high street retailers and 2.9 million employees. The message was clear: brick-and-mortar shops were losing ground not because they were less efficient, but because foreign e-commerce giants were playing by different rules.
Why This Matters to Every UK Shopper
It’s not just about stores closing. It’s about fairness. For nearly five years, a UK consumer could buy a £120 pair of sneakers from a Chinese online seller, pay £120, and never see a customs bill. Meanwhile, a local shop buying the same sneakers from a UK wholesaler paid VAT, payroll taxes, business rates, and — crucially — customs duty on the import. That added up to a 20-25% cost difference, according to BRC data. The result? Online sales of low-value imports (LVIs) exploded. In 2024 alone, HM Revenue & Customs recorded 2.1 billion such parcels entering the UK. Most never paid a penny in duty.The Rules Before the Change
Since January 1, 2021, following Brexit, the UK allowed a blanket customs duty exemption for goods valued at £135 or less. It was meant to simplify trade and reduce red tape for small shipments. But it became a loophole. Parcel operators like DHL Express UK Ltd and customs intermediaries such as Kuehne + Nagel Ltd used a simplified declaration system — fewer fields, faster processing — to clear these shipments. No duty. No VAT collection at the border. No level playing field.What’s Changing — and When
The Autumn Budget 2025, delivered on October 30, 2025, laid out the roadmap. Starting March 31, 2029, every business selling goods to UK customers — whether they’re a small Etsy seller in Poland or Amazon UK Services Ltd — must pay customs duty on imports under £135. The government isn’t just removing the exemption. It’s building a new system to collect it. The new arrangements will let online marketplaces act as tax collectors, similar to how they already handle VAT under the IOSS scheme. This means platforms like eBay, AliExpress, and Amazon will be responsible for calculating, collecting, and remitting duty on behalf of their third-party sellers. It’s a shift in responsibility — not just a tax hike.
Who’s Still Excluded? (And Why It’s Still Unclear)
The policy paper says certain consignments will be excluded from the new rules — even if they’re under £135. But it doesn’t say which. Gifts? Medical supplies? Books? Samples? The government admits the list isn’t final. That’s causing quiet panic among small exporters and niche retailers who rely on those exemptions. A London-based artisan who ships handmade candles to the UK from Portugal worries her £80 shipments might now be hit. A Manchester-based charity that receives medical supplies from India fears delays. The lack of clarity is a real risk.What This Means for Logistics and Consumers
The ripple effects are already being felt. Logistics UK, representing 12,000 supply chain firms, has been summoned for consultations. Border agencies are preparing for a surge in customs declarations — potentially millions more each month. The cost of processing? The government says it’ll be absorbed by platforms, but logistics firms fear higher fees will trickle down. Consumers won’t see the duty on their receipts — but they’ll see the price. Analysts estimate average prices on imported goods under £135 could rise 10-15% once duty (typically 0-5%) and administrative costs are factored in. That’s not a shock to a £1,000 laptop. But for a £40 phone case or a £25 toy? That’s noticeable.Why 2029? The Four-Year Buffer
Four years is a long time — but not for tech systems. The government needs to build a new digital customs interface, onboard thousands of overseas sellers, train customs agents, and test the system with real-world data. It’s not just about collecting money. It’s about avoiding chaos at ports like Dover and Felixstowe. The deadline is firm: March 31, 2029. No extensions. The message to e-commerce platforms is unambiguous: get ready.
The Bigger Picture: Fairness Over Convenience
This isn’t about protecting old shops. It’s about modernizing a tax system that broke under the weight of global e-commerce. The UK didn’t create this imbalance — but it let it fester. Now, it’s fixing it. The Chancellor’s team argues this change will raise £1.2 billion annually in new revenue, mostly from large platforms. But the real win? Restoring trust. If you run a local store and pay your taxes, you shouldn’t be undercut by someone who doesn’t.What’s Next?
Over the next 18 months, HM Treasury will publish technical specifications for the new LVI declaration system. Consultations with Logistics UK and industry groups begin in July 2025. By mid-2026, platforms must start registering with HMRC as ‘duty collectors.’ By 2028, full testing begins. And by March 2029? The old rules vanish.Frequently Asked Questions
How will this affect small online sellers from outside the UK?
Small sellers won’t pay duty directly. Instead, platforms like Amazon or eBay will collect it on their behalf. But sellers must register with HMRC and provide accurate product values. Those who don’t comply risk having their listings blocked. Many small exporters may need to hire a customs agent or use a fulfillment service in the UK to stay competitive.
Will this make UK-made goods more competitive?
Yes — but indirectly. Local retailers won’t suddenly become cheaper, but the price gap will narrow. A £120 imported jacket will now cost £125–130 after duty and VAT, closing the 20-25% advantage foreign sellers once had. This gives UK-made products a fairer shot, especially in categories like clothing, electronics, and home goods.
What happens to gifts or personal items sent from abroad?
The government hasn’t finalized exclusions, but personal gifts under £39 are likely still exempt. Commercial goods — even if sent as a ‘gift’ — will be scrutinized. HMRC plans to use AI to flag suspicious patterns, like multiple £130 shipments from the same sender to the same address. Don’t assume ‘gift’ labels will save you.
Why did it take so long to act?
Post-Brexit, the UK prioritized trade facilitation over tax collection. The £135 exemption was seen as a way to boost e-commerce growth. But as online sales surged — and high street closures accelerated — pressure mounted. The BRC’s 2023 economic report, which showed 1,400 retail jobs lost annually due to unfair competition, was the tipping point.
Could this lead to higher prices on UK platforms like Amazon?
Absolutely. Amazon and other marketplaces will pass on the cost of duty collection to sellers — and sellers will pass it to buyers. Expect price increases on imported goods under £135, especially from Asia. Some sellers may pull out of the UK market entirely, reducing choice. Others may shift to UK warehouses, which could create new logistics jobs.
Is this change permanent?
Yes. The government has framed this as a structural reform, not a temporary fix. The goal is to integrate all retail sales — online and offline — into the same tax framework. Future governments may tweak rates or exclusions, but the principle of duty on all imports is now law in all but name.