The BHETA team was delighted today by news of the government's review of a rule that allows small parcels to enter the UK duty-free, saying it gives overseas firms such as Shein and Temu an unfair advantage over British businesses.
The UK Government has launched a review of the de minimis rule—a longstanding policy allowing overseas retailers to send low-value parcels (under £135) into the UK without paying import duties or VAT. The move follows growing pressure from UK businesses and trade associations, including our own, calling for an end to this unfair competitive advantage that favours large international platforms such as Shein and Temu.
This loophole has been widely criticised for distorting competition, undermining UK-based suppliers, and contributing to job losses and declining High Streets. Prominent industry figures, including former Dragon’s Den investor Theo Paphitis—whose retail group includes Ryman and Robert Dyas—have been vocal in their opposition. Speaking on BBC Radio 4’s Today programme, Mr. Paphitis described the measure as "devastating" for UK retailers and called its impact on British high streets "catastrophic."
“Retailers have been lobbying for a very, very long time. It’s time we level the playing field,” said Paphitis.
BHETA's Chief Operating Officer, Will Jones, said: "BHETA has long lobbied the UK Government on this issue, and warned about this loophole and its potential to destabilise the UK market. The current consultation is a positive sign that the government is listening to domestic suppliers, and we are committed to ensuring that our members' voices are heard throughout the process. We acknowledge that some small businesses currently benefit from the threshold, but believe any transition away from the de minimis rule should be managed carefully to support genuine UK SMEs—not enable large-scale exploitation by global online platforms".
Large UK retailers including Sainsbury’s, Currys, and members of the British Retail Consortium have echoed these concerns, supporting the government’s decision to consult on the customs treatment of low-value imports.
The disparity arises because UK-based businesses are required to pay VAT and duties on goods they import, while overseas sellers can avoid these charges entirely on smaller parcels. In practice, this allows foreign sellers to undercut UK prices significantly, often without adhering to the same product safety, environmental, or ethical standards.
The issue has gained further urgency following the U.S. government's recent decision to eliminate a similar tax exemption on imports under $800, a move that has already led to rising prices from Chinese retailers. There are concerns that the UK could become a target for diverted, untaxed goods, creating even greater strain on domestic supply chains.
A Call for Action
We urge policymakers to
- End the tax-free threshold on low-value overseas parcels.
- Ensure all products entering the UK meet equivalent regulatory and tax obligations.
- Protect UK suppliers from unfair foreign competition and product dumping.
The review represents a vital step towards restoring fairness in UK retail and ensuring that our high streets—and the businesses that support them—can compete on equal terms.
