The UK’s £135 duty-free threshold is under review — and reform could reshape the economics of eCommerce importing. Here’s what UK businesses need to know now.
In summary: The UK’s current £135 duty-free import threshold means goods valued below £135 shipped directly to UK consumers attract no customs duty (though VAT still applies at point of sale). Proposed government reforms — driven by competitive pressure from ultra-low-cost platforms like Temu and Shein — could abolish or significantly lower this threshold. For UK importers, eCommerce businesses, and Amazon FBA sellers, this means new duty costs on low-value shipments and a rethink of some fulfilment models.
Cast your mind back to post-Brexit Britain. One of the quirks of the UK’s customs regime — inherited and adapted from EU customs law — is the “low-value consignment relief” that applies to goods valued under £135.
Under current rules, when a parcel worth less than £135 is sent directly to a UK consumer (say, a £40 phone case shipped from a seller in Guangzhou), no customs duty is charged. VAT is collected — but at the point of online sale, not at the border, thanks to the Marketplace VAT rules introduced in 2021. The actual customs duty? Zero.
For context, the standard UK customs duty on clothing from China is 12%. On electronics, it varies. On housewares, around 3–6%. The £135 threshold means these categories, when sent as small parcels direct to consumers, effectively bypass duty entirely.
This has created a significant competitive distortion. UK retailers — who import goods in bulk, pay full duty, and pass those costs through to retail prices — are competing against direct-to-consumer platforms that effectively pay none.
The short answer: Temu, Shein, and the explosion of ultra-low-cost direct-from-China parcels flooding UK doorsteps.
In 2024 and 2025, the UK Government received significant lobbying from British retailers arguing that the current regime gives overseas platforms an unfair duty advantage. The British Retail Consortium, the BIRA (British Independent Retailers Association), and individual brands made the case publicly and in parliamentary submissions.
HMRC launched a consultation on the UK’s low-value import framework — exploring whether to reduce the threshold, abolish it entirely (as several other markets are doing), or introduce a small flat-rate duty on all parcels below a certain value.
The EU has already signalled it will abolish the €150 customs duty exemption. The US eliminated its $800 de minimis threshold for China and Hong Kong shipments in 2025. The UK is watching these developments closely, and reform is widely anticipated within the 2025–2027 policy window.
Sourcing Hack #1: Don’t wait for the legislative announcement to stress-test your landed cost model. Run your numbers now with a scenario where a 6–12% duty applies to all import shipments, regardless of value. If your margins hold up, you’re well-positioned. If they don’t, now is the time to renegotiate factory pricing, adjust your retail price architecture, or consolidate shipments. The businesses caught flat-footed are always the ones who didn’t plan ahead.
The impact depends heavily on your business model:
If you’re a bulk importer (commercial shipments): Minimal direct impact. You’re already paying duty on your full consignments. In fact, this reform could level the playing field and make your products more competitive against direct-from-China low-value parcels.
If you’re an eCommerce seller using dropshipping from China: Significant impact. Your current model relies, at least partly, on the duty advantage of sub-£135 parcels. A new duty regime would add 5–15% to your cost per order, depending on product category. Your pricing model will need to change.
If you’re an Amazon FBA seller importing bulk into UK Amazon warehouses: Some impact at the inventory-import stage, but you’re largely already paying duty on commercial imports. The bigger story is how the competitive landscape shifts if direct-from-China FBM competitors lose their cost advantage. This could actually be good news for established UK-based FBA inventory holders.
If you’re running a subscription box or low-AOV product business: Worth stress-testing urgently. If your average order value is sub-£135 and you’re currently using direct shipping from a Chinese 3PL, a new duty regime could be material to your unit economics.
The Amazon FBA universe in the UK is already feeling the squeeze from ultra-low-cost competitors listing directly from Chinese warehouses. The current duty threshold is part of what makes that model economically viable for overseas sellers.
If the threshold is removed or significantly lowered, the competitive dynamic shifts in favour of sellers who’ve built legitimate UK import models. Sellers who’ve done the work — working with private label products, paying proper duty, holding UK stock — stand to benefit from a more level playing field.
The lesson here is one we’ve been saying for years at Epic Sourcing: sourcing directly from manufacturers, building real brand equity, and operating with a sustainable cost structure will always outperform the race-to-the-bottom parcel model over the medium term.
If you’re building a long-term eCommerce brand and you want to understand how to source properly from China — with real cost efficiency, compliance, and resilience — our complete guide to importing from China to the UK is essential reading.
Even if the reform timeline is uncertain, there are practical steps you can take now.
1. Review your fulfilment model. If you’re currently relying on direct China-to-consumer shipping for sub-£135 orders, model the impact of a 6–12% duty addition. At what point does it become more cost-effective to hold UK stock and fulfil domestically?
2. Explore UK 3PL options. Holding a buffer of inventory in a UK warehouse creates resilience against policy changes and supply disruptions. It also means faster delivery times — which customers increasingly expect.
3. Review your HS codes. Some products attract lower duty rates than you might expect. Getting the correct commodity code for your products before any reform takes effect could save you meaningful sums. HMRC’s UK Trade Tariff tool is useful for this, though working with a customs broker ensures accuracy.
4. Talk to your sourcing agent. If you work with an agent in China, now is the time to have an honest conversation about how your supply chain would adapt if direct shipping costs increase. A good agent will help you think through consolidation options, alternative freight models, and price renegotiation. See our guide on the role of sourcing agents in China for more.
Sourcing Hack #2: If you import regularly from China and haven’t used a Customs Freight Simplified Procedure (CFSP) or Duty Deferment Account before, now is a good time to explore both with your freight forwarder. They allow you to defer duty payment to a monthly cycle rather than paying at each border crossing — which can meaningfully improve your cash flow, especially as duty costs increase.
The £135 threshold reform specifically targets direct-to-consumer low-value parcels. Standard commercial import shipments — where a UK business imports a container of goods for wholesale or retail — already operate under the full tariff regime. So for the vast majority of UK SMEs importing from Chinese factories, the core landed cost calculation doesn’t change dramatically.
What does change is the competitive environment. If direct-from-China platforms lose their duty advantage, UK-stocked products become relatively more price-competitive. That’s a meaningful tailwind for established importers who’ve been playing by the rules.
The broader cost picture for UK importers is also shaped by freight rates, the GBP/CNY exchange rate, Chinese factory pricing, and UK import duty rates under the UK Global Tariff. If you’re new to importing from China, our guide to importing from Alibaba to the UK is a good practical starting point, and our complete importing from China guide covers the full picture.
Sourcing Hack #3: Model your landed costs in GBP, not USD. Most factory quotes from China come in USD, and many importers do their financial modelling in USD too — which masks real exchange rate risk. The GBP/USD rate has moved 15–20% over 3-year periods multiple times in the last decade. Build GBP-denominated cost models and consider forward exchange contracts if your order values justify it.
At Epic Sourcing, we’ve helped British businesses import everything from private label skincare to gym equipment to custom packaging from China — and we’ve navigated every curveball the UK customs regime has thrown since Brexit.
Our view is straightforward: the businesses that build resilient, transparent supply chains — working directly with verified manufacturers, importing at commercial scale, understanding their true landed costs — will always come out ahead of those chasing short-term cost advantages through grey-area fulfilment models.
If you want to talk through how your importing model holds up against potential threshold changes — or if you’re thinking about moving from a direct-ship model to a more UK-based inventory approach — book a free strategy call or email us at hello@epicsourcing.co.uk.
Our White Label, Private Label, and Secret Label packages are each designed for different types of UK importers — and we’re happy to help you work out which model is right for your business.
Under current UK customs rules, goods valued at £135 or under that are sent directly to UK consumers in individual parcels are exempt from customs duty (though VAT is collected at point of sale by the seller). This applies per consignment, not per item, and was designed to reduce administrative burden on low-value imports.
As of May 2026, the UK government has launched consultations on reforming the threshold but has not yet announced a confirmed abolition date. HMRC is reviewing the policy in light of competitive pressure and the direction taken by the EU and US. Reform within the 2025–2027 parliamentary window is widely anticipated, but businesses should monitor HMRC announcements closely.
Currently, goods dropshipped directly from China to UK consumers under £135 per parcel attract no customs duty. If the threshold is removed, these shipments would attract standard UK import duty rates — typically 3–12% depending on product category. This would significantly increase the cost per order for businesses using direct China fulfilment models.
No. When FBA sellers ship goods from China to Amazon’s UK fulfilment centres, this is treated as a commercial import and full duty applies regardless of consignment value. The £135 threshold specifically applies to direct-to-consumer postal consignments, not commercial bulk imports.
This depends on your product’s HS commodity code and country of origin. Most consumer products from China attract duty rates of 3–12% under the UK Global Tariff. Our guide to importing from Alibaba to the UK also covers duty calculations in practical terms.
If your current model relies on direct-from-China sub-£135 consignments, yes — it’s worth stress-testing your unit economics and exploring a UK-stocked inventory model. If you’re a standard bulk importer bringing goods in commercially, the direct impact is limited. Either way, this is a good moment to review your landed cost model. Talk to us if you’d like a second opinion on your supply chain’s resilience.
Written by TK Wang, Founder & Director @ Epic Sourcing
