The UK's low-value import duty exemption is being overhauled before 2028. If you're dropshipping from China or relying on the £135 threshold, here's what you need to know — and do — right now.
In summary: The UK's £135 low-value import duty exemption is set to be reformed ahead of 2028. Goods previously slipping through duty-free because they were declared under the threshold will soon attract customs duty. UK importers and eCommerce brands need to understand what's changing, recalculate their landed costs, and transition to bulk import supply chains before the deadline arrives.
There's a scene that plays out every week across thousands of UK eCommerce businesses. A spreadsheet open on one screen, an Alibaba supplier chat on another. The question at the top of the spreadsheet: how do I keep my cost per unit low enough to compete? For years, one answer whispered through the dropshipping forums was: keep your parcel values under £135 and skip the customs duty. Simple. Legal. And — for now — correct.
The trouble is, that era is coming to a close. The UK Government has been laying the groundwork for one of the most significant reforms to low-value import rules in recent memory. If you're importing products from China or Vietnam — whether as an Amazon FBA seller, a direct-to-consumer brand, or a traditional retailer — this reform will touch your margins.
In this post, I want to walk you through what the low-value import duty reform actually means, when it's likely to land, and what smart UK importers are doing right now to stay ahead of it.
Low-value import duty relief — sometimes called Low Value Consignment Relief, or LVCR — is a longstanding customs policy that exempts small-value goods from import duty. In the UK, any goods with a customs value under £135 are currently exempt from customs duty at the border. They are still subject to import VAT (typically 20%), but no duty charge applies.
The original rationale was practical. Processing a formal customs duty entry for a £12 pack of phone cases costs more in administrative time and overhead than the duty revenue would generate. So the government drew a pragmatic line: below £135? You can pass duty-free.
For years, this worked as intended. Small businesses imported modest quantities of goods, legitimate trade flowed freely, and the administrative burden on HMRC and Border Force was manageable. Then platforms like Temu and Shein arrived — and weaponised LVCR at industrial scale. Millions of individual parcels, each carefully declared just below the threshold, flooded into the UK from Chinese warehouses. UK retailers and traditional importers cried foul. Frankly, they had a point.
The UK Government has signalled its intention to reform the low-value import duty system with implementation targeted ahead of 2028. The core change is expected to significantly lower or remove the £135 customs duty exemption threshold — bringing the UK in line with the direction the EU and US are already moving in.
The timeline: Formal implementation is being targeted for 2028, with consultations and transitional guidance anticipated well before then. That gives UK importers meaningful lead time — but not unlimited time.
Who it hits hardest: Businesses using direct-from-China fulfilment models — where a Chinese supplier ships individual parcels to UK customers on your behalf — are squarely in the reform's crosshairs. If your supply chain relies on individual consignments from Asia valued under £135 each, your cost base is about to shift meaningfully.
What's still uncertain: The exact new threshold (if any is retained), enforcement mechanisms for cross-border platforms, and the precise duty rates that will apply once the reform kicks in. Consultations are ongoing, so stay close to HMRC announcements.
"The direction of travel is clear — the days of freely importing low-value goods from Asia into the UK without customs duty are numbered. The smart move is to restructure your supply chain now, before the rules force you to scramble at the last minute." — TK Wang, Epic Sourcing UK
Let me be direct about who this affects and how. If your current business model involves a Chinese or Vietnamese supplier dropshipping individual parcels directly to your UK customers — each valued under £135 — this reform is coming directly for you. The policy is explicitly designed to level the playing field between overseas sellers exploiting low-value parcel loopholes and UK-based businesses paying the full whack of duty and VAT.
If you're a UK brand owner who already bulk imports into the UK — bringing a pallet or container from your manufacturer, clearing customs once, and selling from UK-held stock — you're in a much stronger position. Whether you use our White Label, Private Label, or Secret Label sourcing model, you've already built the supply chain infrastructure that survives this kind of reform.
The brands that will struggle are those that never invested in proper UK supply chain infrastructure — relying instead on the grey zone of low-value consignment relief to keep costs artificially down.
Sourcing Hack #1:
Run a quick stress test right now. Take your current cost per unit landed (including the freight your supplier charges to ship direct to your customers). Then add your expected import duty rate to every parcel. For most consumer goods from China, duty rates run between 4% and 12%. If the numbers break your margins, start planning your transition to bulk importing today — not in 2027.
Under the current system, goods under £135 pay import VAT at 20% but zero customs duty. Under the reformed system, customs duty will likely be layered on top — meaning every parcel that previously slipped through duty-free will now attract a duty charge based on its commodity code.
Here's a real-world example. Say you're importing insulated travel mugs from a Zhejiang supplier at £9 per unit. Your supplier ships them individually to UK customers (each parcel under £135). Currently: no customs duty, just VAT collected at checkout. Post-reform, if a 6.5% duty rate applies (realistic for stainless steel drinkware), that's an extra 59p per mug. Multiply by 10,000 units a year and you're looking at almost £6,000 in additional costs — without changing a single thing about your product or supplier.
For context: that £6,000 isn't going to destroy a mature brand. But it will destroy a thin-margin dropshipping operation that was already living on borrowed time.
Sourcing Hack #2:
Use HMRC's UK Global Tariff lookup tool at trade.gov.uk to find your product's commodity code and the applicable duty rate. Knowing your specific rate now lets you model your post-reform cost base accurately — and gives you the data you need to either renegotiate with your supplier or adjust your retail pricing before you're forced to.
At Epic Sourcing, we've been having this conversation with clients for some time. The good news is the response isn't complicated: build a resilient, direct UK supply chain before the deadline, rather than scrambling after it. Here's the practical roadmap.
If your current setup has a supplier shipping individual units to UK customers from a Chinese warehouse, this is your moment to transition. Bulk importing — shipping a full pallet or container to the UK, clearing customs once, storing locally, and fulfilling from UK stock — is structurally more resilient. You pay duty once on a bulk shipment, your per-unit freight costs drop, and you have quality control before goods reach your customers.
We've written extensively about how small businesses cut costs by sourcing directly from manufacturers. The same principles apply here — direct relationships, bulk purchasing, and UK-warehoused stock are the foundation of a sustainable import business.
Every product imported into the UK has a commodity code (HS code) that determines its duty rate. Errors in classification — or intentionally vague product descriptions to dodge duty — constitute customs fraud. With HMRC set to tighten scrutiny as the reform approaches, now is the time to make sure your goods are accurately classified. A qualified customs broker can help, and it's worth the cost.
As we cover in detail in our Complete Guide to Importing from China to the UK, the sourcing landscape is shifting. Vietnam is increasingly competitive on labour costs for certain product categories, and UK trade agreements with some countries may offer preferential duty rates for qualifying goods. Your sourcing agent can help you assess whether diversifying your supply base carries any duty advantages.
For sellers importing physical consumer goods like toys or children's products, our companion post on sourcing toys from China for the UK market also covers how duty reform intersects with UK product compliance requirements.
Sourcing Hack #3:
Check whether your product qualifies for a preferential duty rate under any UK trade agreements. Post-Brexit, the UK has struck bilateral deals with dozens of countries. Rules of origin apply — a product manufactured in Vietnam to Vietnamese rules of origin may attract a lower UK duty rate than the identical product from China. Your freight forwarder or sourcing agent can help you work through this.
The reform is expected to place greater responsibility on online marketplaces to collect and remit customs duty on behalf of their sellers — a model similar to how overseas VAT on B2C sales is already handled. If you sell on Amazon FBA, watch for communications from Amazon about changes to how they handle duty collection for cross-border and merchant-fulfilled inventory.
For Amazon FBA sellers with a proper UK bulk import chain — buying in China, shipping to UK, delivering to Amazon's fulfilment centres, selling from UK stock — you're largely insulated. The duty is paid at the UK border when your bulk shipment arrives. You're already doing it the right way.
Sourcing Hack #4:
If you're not sure whether your Amazon FBA supply chain is structured correctly for post-reform compliance, look at your current customs entries. Are they filed for bulk shipments arriving in the UK? Or are individual parcels routing from China through Amazon's cross-border logistics? The answer tells you whether you need to act now or whether you're already set up correctly.
Currently, goods imported into the UK with a customs value of £135 or less are exempt from customs duty. They remain subject to import VAT (normally 20%). The £135 threshold applies per consignment and is separate from VAT registration thresholds for overseas sellers. This is the threshold being reviewed ahead of 2028.
The UK Government has indicated implementation is targeted for 2028. Formal consultations and transitional guidance are expected to be published before that date. UK importers should monitor HMRC's website and trade association announcements, and use the available lead time to restructure any supply chains that currently rely on low-value consignment relief.
The reform will technically affect all low-value imports regardless of origin. However, the practical impact is largest for direct-from-China and direct-from-Asia small parcel flows, which have exploited the threshold most aggressively. UK businesses that already bulk import — bringing goods in by pallet or container and clearing customs once — will feel minimal direct impact from this specific reform.
Duty rates are product-specific and determined by commodity codes under the UK Global Tariff. Common consumer goods from China typically attract duty rates of 4% to 12%, though some categories are higher (clothing can be 12%) and some are zero (certain electronics). Until the exact reform parameters are finalised, model a range of duty rate scenarios for your products using current UK Global Tariff rates.
A good UK sourcing agent can help you transition from a dropshipping or direct-from-China fulfilment model to a structured bulk import model. This includes finding manufacturers willing to work at UK-appropriate MOQs for bulk shipments, negotiating pricing that makes bulk purchasing viable, arranging quality control before goods ship, and connecting you with freight forwarders and customs brokers who can manage your UK import compliance correctly.
Duty reforms, tariff changes, new compliance requirements — the regulatory landscape for UK importers will keep evolving. The businesses that thrive aren't the ones who react fastest; they're the ones who built the right infrastructure from the start.
If you want a frank conversation about your current supply chain and what it needs to look like post-2028, book a call with our UK team or drop us a line at hello@epicsourcing.co.uk. We're here to help British businesses import smarter.
— TK Wang, Founder & Director @ Epic Sourcing
