Right, let's cut through the noise — because there's a lot of it. Every UK online seller, importer, and ecommerce brand needs to understand what's happening with the UK's low-value import threshold, what it means in practice, and what you should be doing about it right now. If you're sourcing products from China, Vietnam, or anywhere else outside the UK and selling them here, this guide is written specifically for you.
The UK's £135 de minimis customs threshold has been the unsung hero of low-cost importing since the Brexit transition ended in January 2021. For years, goods arriving in the UK with a customs value below £135 were exempt from import duty — not VAT, but duty. That exemption has shaped the business models of thousands of UK online sellers, dropshippers, and small importers. Now that's changing, and the timeline is 2026 to 2028.
At Epic Sourcing, we work with UK businesses every week who are navigating exactly these issues — pricing pressure, supplier relationships, compliance obligations, and the ever-shifting cost of getting goods from a factory floor to a UK customer's door. This guide will tell you what the threshold currently is, what's changing, when the changes land, what you need to do to prepare, and — crucially — how to restructure your sourcing so these changes don't destroy your margins.
This guide is for:
The UK low-value import threshold (sometimes called the de minimis threshold) is the customs value below which goods imported into the UK are exempt from import duty — currently set at £135. It does not apply to import VAT, which is handled separately under the UK's overseas seller VAT rules introduced in January 2021.
Let's start with a clear understanding of where we are right now, because there's genuine confusion in the market about what the £135 threshold actually covers — and what it doesn't.
The £135 threshold is a customs duty relief. When goods enter the UK with a declared customs value of £135 or below, no import duty is charged at the border. This exemption applies to the intrinsic value of the goods — not including transport and insurance costs, though in practice the rules around what to include can vary by shipment type.
This threshold was established as part of the UK's post-Brexit customs framework and came into full effect on 1 January 2021. It broadly mirrors the approach taken by many countries to reduce customs administration burden on low-value parcels — particularly relevant for the explosive growth in direct-from-China ecommerce shipments that followed.
Here's where a lot of sellers get confused. The £135 threshold has never exempted goods from VAT. Since January 2021, the UK's overseas seller VAT rules require that:
If you're importing goods in bulk (business-to-business, or B2B), the overseas seller VAT rules work differently. You typically import the goods, pay import VAT at the border, and then reclaim it through your VAT return. The de minimis threshold for customs duty still applies to bulk B2B shipments, but the practical impact depends on whether your goods attract significant duty rates.
Context matters. The UK's £135 customs duty threshold is actually relatively generous compared to some other major trading nations, but is under increasing pressure as governments globally recognise that ultra-low or zero de minimis thresholds have enabled a surge in untaxed or under-taxed ecommerce imports.
| Country / Region | Current De Minimis Threshold | VAT/GST on Low-Value Goods | Status |
|---|---|---|---|
| United Kingdom | £135 (customs duty) | VAT at point of sale (since Jan 2021) | Changing 2026–2028 |
| European Union | €150 (customs duty) | VAT via IOSS or at import (since Jul 2021) | Review ongoing |
| United States | $800 (general de minimis) | Varies by state; no federal equivalent | Restricted for China/HK goods (2025) |
| Australia | AUD 1,000 | GST at point of sale (since Jul 2018) | Stable |
| Canada | CAD 20 | GST/HST applies below threshold | Under review |
The global trend is clear: governments are tightening up low-value import exemptions. The UK's changes are part of a wider international shift, not an isolated policy decision.
The UK government has been reviewing the de minimis threshold and the broader customs framework for low-value goods since the initial post-Brexit rules came into effect. The pressure to reform has come from multiple directions:
The UK moved VAT on goods under £135 to the point of sale, shifting the collection obligation to overseas sellers or marketplace platforms. Import duty exemption for goods under £135 remained in place.
UK customs authorities are increasing data requirements for low-value parcel shipments, requiring more detailed product-level customs data at the carrier level. This lays the administrative groundwork for the duty changes to follow. Border Force compliance checks on low-value shipments are increasing in frequency.
The £135 import duty threshold is expected to be significantly reduced, potentially to £0 for goods originating from certain countries or entering via specific channels. Consultations with industry are ongoing, but the direction of travel is firmly toward reduction or elimination of the exemption for direct-to-consumer ecommerce shipments.
Full implementation of revised customs duty rules for low-value imports. By this point, sellers who have not restructured their supply chains, pricing models, and customs compliance will face significantly higher costs and administrative burdens on every shipment.
The exact mechanics of the 2027–2028 changes are subject to HMRC consultation and Parliamentary approval. This guide reflects the direction of confirmed policy travel and publicly stated government objectives. Specific duty rates and thresholds may differ from those outlined here once final legislation is published. We strongly recommend registering with HMRC's trade updates service and engaging a qualified customs advisor before making major business decisions based solely on this guide.
If you're sourcing products from China, Vietnam, or other low-cost manufacturing countries and selling them in the UK — whether through your own website, Amazon, eBay, Etsy, or any other channel — these changes will affect your cost structure. The degree of impact depends on your business model, your product category, your order values, and how you currently structure your supply chain.
For UK businesses that import goods in bulk (buying a container load and warehousing in the UK), the changes primarily affect your competitors — particularly the overseas direct-to-consumer platforms that have been undercutting you by exploiting the duty relief. For many UK importers who already pay full customs duty on their shipments, these changes will actually level the playing field. If you've been competing with Temu or Shein and wondering how they price so aggressively, part of the answer has been this threshold.
For businesses that currently use a dropshipping model or that ship individual orders direct from overseas suppliers to UK customers, the impact is more significant. Under the current rules, those individual shipments (if under £135 each) arrive without import duty. Under the new rules, every shipment — regardless of value — will need to be declared and may attract duty. This fundamentally changes the economics of the dropshipping model for Chinese and Vietnamese goods.
The honest reality is that the UK's low-value import threshold changes are the single most significant customs policy development for small UK ecommerce sellers since Brexit. And the businesses that prepare now will be far better positioned than those who wait until 2027 or 2028 to react.
Let's look at this in concrete terms. Here's how the cost of a typical imported product shipment changes under the current versus the proposed post-reform rules.
| Factor | Current Rules (Pre-Reform) | Post-Reform (2028) |
|---|---|---|
| Import duty on £80 shipment | £0 (below £135 threshold) | Applicable rate (e.g. 12% = £9.60) |
| Import duty on £120 shipment | £0 (below £135 threshold) | Applicable rate (e.g. 12% = £14.40) |
| Import duty on £200 shipment | Already applies (e.g. 12% = £24) | No change in calculation method |
| VAT on B2C goods under £135 | Charged at point of sale (seller/marketplace) | May shift to border collection |
| Customs entry requirement | Simplified data for sub-£135 parcels | Full customs declaration required |
| Carrier compliance burden | Low for low-value parcels | Higher — more data, more processing time |
| Dropshipping direct from China model | Viable for sub-£135 goods | Significantly more expensive per unit |
| Bulk import to UK warehouse model | Already pays full duty | Competitive advantage over direct ship |
The numbers tell a clear story: businesses that already import in bulk and pay duty are largely unaffected in terms of their own cost structure, and actually benefit from the levelling of the playing field. Businesses that rely on individual parcel shipments direct from overseas suppliers face a meaningful cost increase per order.
If you currently dropship 200 orders per month with an average product cost of £60 (well below £135), and the applicable duty rate on your product category is 12%, you're currently paying £0 in duty. Post-reform, each order could attract £7.20 in duty. Across 200 orders, that's £1,440 per month in additional cost — £17,280 per year. At scale, this is a business-model-level problem, not a minor line-item adjustment.
Whether you're affected by the threshold changes or not, understanding the UK's customs compliance framework is essential for any business importing goods. Here's what you need to know.
An Economic Operators Registration and Identification (EORI) number is a unique identifier required by any UK business that imports or exports goods. If you're bringing goods into the UK — at any value, under any threshold — you need an EORI number. Getting one is free and straightforward via HMRC's online service, and most applicants receive their number within five working days.
Without an EORI, your goods cannot be cleared through UK customs. Your freight forwarder or carrier may be able to use their own EORI in some circumstances, but this comes with added cost and complexity, and you lose visibility and control over the declaration process.
The UK's Customs Declaration Service (CDS) is HMRC's digital customs platform, which replaced the older CHIEF system and is now mandatory for all customs declarations. When goods arrive at Felixstowe, Southampton, London Gateway, or any other UK port, the import declaration is submitted through CDS.
Most UK importers don't interact with CDS directly — instead, they engage a customs agent (also called a customs broker or freight forwarder) who handles declarations on their behalf. However, as the threshold changes increase declaration volumes for low-value goods, customs agent capacity is likely to tighten and costs for individual declarations may rise. Businesses that currently rely on simplified procedures will need to account for this.
If you're a UK-based business importing goods and selling them in the UK with annual taxable turnover above £90,000 (the current VAT registration threshold), you must be registered for UK VAT. Most businesses importing goods of meaningful volume will already be VAT registered.
If you're an overseas seller shipping goods to UK consumers, the rules are more complex. Since January 2021, overseas sellers whose goods are in the UK at the point of sale (e.g., goods stored in a UK fulfilment centre) or who are selling goods below £135 direct to UK consumers must register for UK VAT regardless of their turnover. Marketplaces like Amazon and eBay handle this for sales made through their platforms, but for sellers with their own websites, the obligation falls on the seller directly.
Every product imported into the UK has a commodity code — an 8-10 digit number under the UK Global Tariff that determines the applicable import duty rate and any other trade measures (anti-dumping duties, quotas, etc.). Post-reform, getting your commodity code right will matter more than ever, because mistakes that previously had no financial consequence (your goods were under £135) will now cost you money.
Deliberately mis-declaring the value of goods to stay below a duty threshold is customs fraud. HMRC takes this seriously, and penalties can include seizure of goods, financial penalties, and in serious cases, prosecution. With HMRC increasing scrutiny on low-value parcel shipments as part of the reform process, the risk of enforcement action is rising. Don't undervalue goods as a workaround — it's not worth it.
The duty rate applied to your goods depends not just on what they are, but where they come from. The UK has trade agreements with a number of countries — including the UK-Vietnam Free Trade Agreement (UKVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, which the UK joined in December 2024), and various other bilateral deals — that provide preferential (reduced or zero) duty rates for goods originating in those countries.
Goods from China do not benefit from any preferential duty rate under current UK trade agreements — the UK Global Tariff (MFN) rates apply. This is a meaningful distinction. A product manufactured in Vietnam that qualifies as originating in Vietnam under UKVFTA rules may attract 0% duty, while the same product manufactured in China could attract 12% or more depending on the category. As the low-value threshold is removed, origin will become an increasingly important factor in total landed cost calculations.
This is the business model most acutely affected by the threshold changes. The core economic proposition of direct-from-China dropshipping — low upfront investment, no UK warehousing costs, individual parcels shipped on demand — depends heavily on the fact that low-value shipments currently arrive duty-free. When that exemption disappears, the cost per order increases, the speed to delivery may slow (more comprehensive customs processing), and the customer experience risk rises (parcels held at customs, unexpected charges presented to customers).
The response for many serious dropshipping businesses will be to shift towards a hybrid model: importing in bulk to a UK fulfilment centre and fulfilling domestically. This is actually a more resilient and customer-friendly model anyway — faster delivery, more control, better returns handling. The threshold change may accelerate a transition that was already strategically sensible.
Amazon FBA (Fulfilment by Amazon) sellers in the UK already import goods into the country and warehouse them at Amazon's UK fulfilment centres. Those goods go through UK customs at the point of import — duty applies at the time of the bulk shipment arriving at Felixstowe or Southampton, not on each individual customer order. For these sellers, the threshold changes have limited direct impact on their own import costs.
However, FBA sellers will benefit from the changes reducing the competitive advantage of overseas sellers who ship individual items directly to UK Amazon customers. This levelling of the playing field is genuinely good news for established UK FBA sellers who've been competing with direct-ship Chinese sellers on price.
If you're a UK brand that imports finished goods from a Chinese or Vietnamese factory — buying in bulk, warehousing in the UK, and selling through your own channels — your supply chain already involves paying full import duty on your shipments. You are not exempt under the current rules because your shipment values are almost certainly well above £135.
The threshold changes don't directly increase your costs. But they do give you an opportunity: your business model becomes comparatively more competitive against direct-ship overseas competitors. If you've been losing price-sensitive customers to Temu or similar platforms, that competitive gap will narrow as those platforms face higher per-unit costs on UK deliveries.
Sellers who operate across multiple channels — their own website, Amazon, eBay, Etsy, TikTok Shop — need to understand how each channel handles the compliance obligations. Where marketplace platforms are the deemed supplier for VAT purposes, the platform handles collection. But for your own website, you remain responsible for ensuring correct VAT is charged, and post-reform, you'll need to ensure correct duty is paid on all imported stock regardless of individual shipment value.
Understanding your true landed cost is the foundation of any profitable importing operation. Here's a comprehensive breakdown for a typical UK importer bringing goods from China versus Vietnam, pre and post threshold reform.
| Cost Component | China → UK (Current) | China → UK (Post-Reform) | Vietnam → UK (Post-Reform, UKVFTA) |
|---|---|---|---|
| Product Cost (ex-factory) | £50.00 | £50.00 | £55.00 (slightly higher MFG cost) |
| Sea Freight to UK (per unit, 20ft container basis) | £4.00–£7.00 | £4.00–£7.00 | £4.50–£7.50 |
| Import Duty (12% on CIF value, example) | £0 (if below £135 threshold) | £6.60–£6.84 | £0 (UKVFTA zero rate, if origin qualifying) |
| Import VAT (20% on duty-inclusive CIF value) | Reclaimable as VAT-registered importer | Reclaimable as VAT-registered importer | Reclaimable as VAT-registered importer |
| Customs Clearance / Agent Fee | £2.00–£4.00 per consignment (simplified) | £3.00–£6.00 per consignment (full declaration) | £3.00–£6.00 |
| UK Port Handling (Felixstowe/Southampton) | £1.50–£3.00 | £1.50–£3.00 | £1.50–£3.00 |
| Last-mile UK Delivery | £2.50–£5.00 | £2.50–£5.00 | £2.50–£5.00 |
| Approximate Total Landed Cost | £60–£69 | £67–£79 | £65–£76 |
Note: These figures are illustrative examples for a product in a 12% duty category. Actual costs vary significantly by product category, shipment size, carrier rates, and specific customs classifications. VAT-registered importers reclaim import VAT, so it is treated as a cashflow item rather than a cost. Always obtain precise figures from your freight forwarder and customs agent.
The Vietnam comparison is particularly instructive. For eligible product categories under the UKVFTA, sourcing from Vietnam and obtaining correct proof of origin documentation can mean the difference between paying 12% import duty and paying zero. For a £50 product, that's £6+ per unit — which at scale can entirely fund the cost of sourcing agent fees, quality control, and supplier management. It's a compelling argument for diversifying your sourcing to Vietnam where your product category allows it.
The 2026–2028 timeline gives UK businesses a meaningful window to prepare. Here's a practical action plan, sequenced by priority.
Get your EORI number
If you don't already have one, apply now via HMRC. It's free and takes minutes to apply. Without it, you cannot import goods legally.
Identify the correct commodity codes for all your products
Use the UK Trade Tariff tool (gov.uk) to look up your products. Note the MFN duty rate, any preferential rates available, and whether anti-dumping duties apply to Chinese-origin goods in your category.
Calculate your post-reform landed cost per unit
Use the commodity code duty rate to calculate what each of your products would cost to import under the new rules. Identify which product lines remain viable and which may need repricing or replacement.
Review your VAT registration status
Confirm you are (or are not required to be) VAT registered. Ensure your VAT accounting correctly handles import VAT and that you're claiming all reclaimable VAT on imports.
Evaluate Vietnam as an alternative or complementary sourcing destination
Particularly for textiles, apparel, footwear, furniture, electronics accessories, and homewares — categories where Vietnam has strong manufacturing capability and UKVFTA preferential duty rates apply. A side-by-side cost comparison including the duty saving can be compelling.
Transition dropshipping to a bulk-import-and-fulfil model
If your business currently relies on individual parcel shipments from China, start modelling the transition to importing in bulk and fulfilling from a UK warehouse. Factor in warehousing costs, working capital requirements, and the logistics of inbound containers via Felixstowe or Southampton.
Engage a trusted customs agent and freight forwarder
The post-reform world will require proper customs declarations on all shipments. A good customs agent who knows your product categories is invaluable — they can ensure correct classification, handle CDS submissions, and advise on how to structure shipments most cost-effectively.
Negotiate and restructure supplier contracts
Your cost landscape is changing. Talk to your suppliers about the changes, explore whether factory prices can be adjusted to offset increased duty costs, and consider whether consolidating your supplier base to achieve better per-unit economics makes sense.
Build a resilient, diversified supply chain
The most competitive UK importers going into 2028 will be those who have diversified across China and Vietnam (and potentially other CPTPP countries), have strong supplier relationships, and have structured their supply chains to optimise for UK duty treatment.
Invest in product differentiation and private labelling
As direct-from-China commodity sourcing becomes more expensive and complicated, the businesses that thrive will be those with products customers actively seek out — not just the cheapest generic option. Private labelling, quality improvements, and brand building become more important, not less, in a higher-duty environment.
Book a free consultation with Epic Sourcing UK. We'll help you model the impact on your specific products, identify potential Vietnam sourcing opportunities, and build a supply chain strategy that keeps you competitive through 2028 and beyond.
Book Your Free ConsultationAt Epic Sourcing, we've been helping UK businesses navigate the complexity of importing from China and Vietnam since before Brexit. We understand the UK customs framework, we have established relationships with vetted manufacturers across both countries, and we know how to structure a sourcing project that optimises your total landed cost — including duty.
As the low-value import threshold changes approach, we're working with UK clients in three key ways: helping them understand the duty impact on their current product range, identifying Vietnam-based supplier alternatives where UKVFTA duty savings make sense, and transitioning businesses from dropshipping to bulk-import models. Here's how our services work:
Perfect for businesses wanting to source an established product type with your own branding applied. We find the right factory, manage sampling, and handle the import logistics. Includes commodity code guidance and duty planning.
From £699
Learn more →For businesses developing a differentiated product with custom specifications. We manage the full factory selection, sampling, production, and quality control process — plus full import compliance support including UKCA marking where required.
From £1,899
Learn more →Our full-service OEM and product development offering. For businesses building a genuine product brand from scratch, with full IP protection, exclusive manufacturing agreements, and end-to-end supply chain management including landed cost optimisation.
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Learn more →Already have a supplier in mind but want independent verification before committing? We conduct on-the-ground factory assessments in China and Vietnam, verifying legitimacy, production capability, and compliance status. Especially valuable before making large first-time orders.
Bespoke pricing
Learn more →For UK businesses looking to take advantage of UKVFTA zero-duty rates, we have an established team on the ground in Vietnam. We can run parallel sourcing projects across China and Vietnam so you get a direct cost comparison — including the duty saving — before you commit to changing your supply chain.
Technically, yes — dropshipping from China to UK customers will still be possible after 2028. But the economics will be fundamentally different. Every individual parcel will require a full customs declaration, and if the goods are below a reduced threshold, import duty will apply to each shipment. For low-margin products, this will make direct-ship dropshipping from China unviable. The businesses that survive in this space will need to either accept lower margins, increase prices (and accept the volume impact), or transition to a UK-warehouse model.
Our recommendation: use the 2026–2028 window to proactively transition. The businesses that adapt early will be well positioned. Those that wait until 2028 will be caught in a scramble alongside thousands of other UK sellers.
The UK Trade Tariff (available at trade-tariff.service.gov.uk) allows you to look up any product by description and find its commodity code and applicable duty rate. You'll need to identify whether your goods are originating in China or Vietnam (or another country), as this determines which rate applies. Goods from China are typically subject to MFN (Most Favoured Nation) rates, while goods originating in Vietnam may qualify for reduced rates under UKVFTA.
If you're unsure about commodity code classification — which is genuinely complex for many product categories — a customs agent or trade advisor can provide a commodity code ruling. HMRC also offers a Binding Tariff Information (BTI) service that gives you legal certainty on classification. Getting this right is important: mis-classification can result in penalties.
Not directly. VAT on UK imports was already reformed in January 2021, with the move to point-of-sale collection for goods valued at £135 or below. The current review is primarily about import duty (customs duty), not VAT. However, there may be associated changes to how import VAT is collected if the duty threshold changes significantly — for example, moving from point-of-sale collection back to border collection for some categories of goods.
As a VAT-registered UK business importing goods for resale, you will generally be able to recover import VAT through your VAT return regardless of how collection is structured. The duty, however, is a direct cost that cannot be recovered in the same way.
Yes, but it requires relocating production. UKVFTA preferential rates apply to goods that genuinely originate in Vietnam under the agreement's rules of origin — meaning they are manufactured in Vietnam using Vietnamese or UK inputs, or that Vietnamese transformation adds sufficient value. Simply shipping goods from China through Vietnam does not qualify; customs authorities are alert to this practice and it carries serious legal risks.
For many product categories — apparel, footwear, bags, furniture, homewares, electronics accessories — Vietnam has strong, cost-competitive manufacturing. The dual benefit of UKVFTA duty savings (potentially 0% vs 12%+) and increasingly competitive factory pricing makes a genuine Vietnam sourcing project worth evaluating carefully. At Epic Sourcing, we run parallel sourcing projects across China and Vietnam to give UK clients a genuine comparison.
The most valuable thing you can do right now is model the impact. Take your current product portfolio, look up the commodity codes and MFN duty rates, and calculate what each product would cost to import under the new rules. Then rank your products by the scale of the impact — the ones with high duty rates and high import volumes are your priority.
For those high-impact products, consider three options: (1) Is there a Vietnam-origin equivalent available at a similar price, where UKVFTA duty savings offset or more than offset any higher factory price? (2) Can you negotiate factory prices downward to partially absorb the duty cost? (3) Can you restructure pricing — and will your market accept a price increase? The businesses that work through this analysis now will make far better decisions than those who wait for the regulations to arrive and react under pressure.
The 2026–2028 window is open. The businesses that prepare now will enter the post-reform era with a resilient, optimised supply chain. The ones that wait will be scrambling. Let's make sure you're in the first group.
At Epic Sourcing, we work with UK businesses to build supply chains that are compliant, cost-effective, and competitive — whether that's China, Vietnam, or both. Book a free 30-minute consultation to discuss your situation.
Epic Sourcing UK — 71-75 Shelton St, London WC2H 9JQ | hello@epicsourcing.co.uk
