Key facts
- UK ministers announced on Tuesday they will close the "de minimis" tax loophole.
- The loophole applies to imports valued under £135.
- The loophole will be closed in October 2028.
- This closure is six months earlier than previously planned.
- Retailers criticized the move as insufficient.
- The loophole unfairly benefits fast-fashion e-commerce giants like Shein and Temu.
- UK businesses face competition from overseas online retailers due to the loophole.
UK ministers have announced an accelerated crackdown on the "de minimis" tax loophole, which allows goods imported under £135 to enter the country without incurring customs duties or VAT. The government stated on Tuesday that this loophole will be closed in October 2028, six months earlier than the previously scheduled date. This decision comes amid ongoing criticism from UK-based retailers who argue that the loophole provides an unfair advantage to large, fast-fashion e-commerce giants like Shein and Temu. These overseas companies can import goods without the taxes and duties that UK businesses must pay, creating a significant competitive imbalance. Retailers have expressed that the accelerated timeline, while a step in the right direction, is still insufficient to fully address the market distortions caused by the loophole. They contend that the continued existence of the loophole, even for a shorter period, allows these foreign competitors to undercut domestic businesses. The government's move to expedite the closure suggests an acknowledgment of the pressure from the retail sector and a desire to implement a more equitable trading environment sooner. However, the specific mechanisms and enforcement strategies following the October 2028 deadline remain a point of focus for industry stakeholders seeking a comprehensive solution to the challenges posed by low-value, high-volume e-commerce imports.