UK retailers urge government to end parcel tariff loophole sooner

UK retailers have welcomed the government’s decision to start charging customs duties on low-value e-commerce parcels but said a March 2029 timeline is too late and risks making the country an international outlier.

UK retailers have been squeezed by rapidly growing ultra-low-cost platforms like AliExpress, Shein, Temu, and more recently Amazon Haul, which send packages directly from factories in China to shoppers’ doorsteps, benefiting from a customs waiver on parcels worth less than 135 pounds ($179).

“I will stop overseas online firms from undercutting our high street” by applying customs duty on parcels of any value, Reeves told parliament in her budget speech on Wednesday.

TIME FRAME IS ‘SIMPLY TOO LONG’

But the finance ministry said the change would be made in March 2029 “at the latest”, with a consultation on the policy to run until March next year.

Helen Dickinson, chief executive of the British Retail Consortium trade body, said the proposed time frame is “simply too long”, citing government figures that 1.6 million parcels are taking advantage of the exemption every day, twice as many as last year.

“Businesses cannot afford any delay,” she said.

The United States, the biggest market for Shein and Temu, has already ended its customs waiver, dubbed “de minimis”, on parcels worth less than $800, scrapping it for imports from China and Hong Kong in May before removing it across the board in August.

The U.S. initially tried to remove the waiver in February with just 48 hours’ notice, but was forced to row back after more than a million packages piled up at New York’s John F. Kennedy International Airport.

The 2029 timeline also puts Britain well behind the European Union, which two weeks ago brought forward a plan to scrap its equivalent customs waiver, on packages under 150 euros, to 2026 from 2028.

Last year South Africa began charging value added tax on low-value parcels, while Brazil introduced a 20% tax on international purchases of up to $50.

CLOSING THE GAP WITH HIGH STREET

Removing de minimis adds to costs for online retailers sending direct to consumers, denting their competitiveness compared to traditional retailers who pay duties on products imported in bulk.

“The gap between online and high street prices will shrink, potentially encouraging shoppers to return to UK retailers,” said Andrew Thurston, customs duty senior manager at accountancy firm MHA.

Dan Finley, CEO of Debenhams Group which owns online fast-fashion retailer Boohoo, said delaying implementation until 2029 “means lost revenue for the UK and continued unfairness in the market.”

Boohoo sales have declined significantly as Shein has grown.

Sainsbury’s owner of Argos which offers an array of products similar to Amazon and Temu, also said it was disappointed by the proposed timeline and there is a risk the UK becomes an international outlier.