Chancellor Rachel Reeves has announced a revised timetable to close a customs duty exemption that allows overseas retailers, primarily Chinese companies like Shein and Temu, to send parcels valued up to £135 into the UK without paying import taxes. The Treasury plans to eliminate this loophole by October 2028, moving the original deadline forward from March 2029 by just six months.
The exemption, which critics say has contributed to the decline of UK High Streets by enabling cheaper foreign goods to undercut domestic retailers, has been a contentious issue since Reeves first flagged a crackdown in last year’s Budget. Retail leaders and industry groups have expressed frustration that the change will take effect too late to mitigate ongoing damage to the sector.
George Weston, chief executive of AB Foods, which owns Primark, criticized the delayed enforcement, noting that the government itself acknowledges the policy’s detrimental impact on town centres and the national treasury. “If the government expects to be seen as serious about rejuvenating town and city centres and preserving UK jobs, then ministers must examine how this unacceptable timeline can be accelerated and show more support for UK retail,” he said.
The pressure on UK retailers comes amid a broader set of challenges, including rising costs linked to business rates reforms introduced under Labour’s administration, increases in national insurance contributions, and mandated minimum wage hikes. Industry representatives worry that numerous shops may close before the exemption is fully addressed.
The British Independent Retailers Association (BIRA) voiced particular dissatisfaction with the pace of change, emphasizing that the loophole was first identified in 2025, yet will persist until late 2028. BIRA chief executive Andrew Goodacre described the timeline as “pathetic” and warned that the government’s sluggish response risks leaving the UK vulnerable to an influx of low-cost imported goods. He urged the next Labour leader, following Keir Starmer’s recent resignation announcement, to take swift action.
In comparison, other international markets have already taken steps to close similar loopholes: the United States has eliminated such exemptions, and the European Union is poised to introduce a £2.60 fee on low-value imports starting next month as a precursor to a full ban on duty exemptions by July 2028.
Helen Dickinson, chief executive of the British Retail Consortium, reinforced calls for immediate measures to level the playing field. “UK retailers cannot afford to compete on an unfair playing field against importers not paying tariffs,” she said, underscoring concerns that the delay may perpetuate the disadvantages faced by domestic businesses.
The government’s announcement comes at a politically uncertain time, with speculation over Reeves’s future as Chancellor growing in the wake of Prime Minister Keir Starmer’s resignation, a development that may influence forthcoming trade and economic policies.