The UK's £135 customs-free import threshold is being phased out by 2028. Here's what it means for UK businesses importing from China and Vietnam — and exactly what to do now.
In summary: The UK's £135 customs-free import threshold — which allowed low-value goods to enter the country without customs duties — is being phased out, with full abolition expected by 2028. Every UK business importing from China, Vietnam, or any overseas supplier will be affected. Here's what the change means, how it'll hit your margins, and exactly what you should be doing right now to prepare.
For related reading, see our companion guide: How to Quality Check Products Before They Leave China — A UK Importer's Guide.
Cast your mind back to simpler times. A British entrepreneur spots a brilliant product on Alibaba — a collapsible water bottle, a nifty cable organiser, a quirky desk lamp — places a small order worth £120, and watches it arrive at their door with minimal fuss and barely a whisper from HMRC. Twas' a golden era.
The £135 de minimis threshold was the rule that made this possible. Goods worth £135 or less could enter the UK without triggering customs duties. For UK micro-businesses, early-stage importers, and Amazon FBA sellers testing new product lines, this was an enormously useful safety net — it kept the barriers to international sourcing low and allowed small operators to compete on something like level terms with larger players.
But the era is ending. And if you haven't started planning for it, now is the time.
The de minimis threshold is the value below which customs duties are not collected on imported goods. In the UK, this has historically sat at £135. Imports below this value were exempt from customs duty — though import VAT still applied in most cases following rule changes in 2021, with the responsibility shifting to overseas sellers or platforms for B2C sales.
The logic behind de minimis thresholds is administrative efficiency. Processing customs declarations for every single low-value parcel — a £12 phone case, a £40 set of kitchen tools — was considered more costly than the revenue it would generate. It was a pragmatic compromise between thoroughness and practicality.
That compromise is now being reconsidered. The exponential growth of platforms like Temu and Shein, which ship hundreds of millions of low-value parcels directly to UK consumers from Chinese warehouses, has exposed just how much revenue the relief was forfeiting — and how significantly it was disadvantaging UK-based retailers who collect VAT on every sale.
The short answer: it was being exploited at scale, and it wasn't fair.
When the de minimis threshold was designed, nobody anticipated that it would one day enable Chinese e-commerce platforms to ship £8 dresses and £15 trainers to British consumers at prices that UK high-street retailers literally cannot match after paying their own tax and VAT obligations. HMRC has estimated that billions of pounds in VAT and duty revenue has been lost through the de minimis loophole in recent years.
The UK government's approach mirrors what the EU did in 2021 — abolishing its own €22 de minimis threshold and requiring platforms to collect VAT on all sales into the bloc from overseas sellers. The goal is to create a level playing field: if a British retailer pays VAT on every sale, an overseas platform shipping direct to British consumers should face the same obligations.
The reform isn't anti-business. It's corrective. But for legitimate UK importers who have been operating within the rules, it still means a meaningful change to cost structures and administrative requirements.
Full implementation of the threshold abolition is expected by 2028. The government has indicated a phased approach, with different elements of the reform coming into effect at different stages.
Two years might sound like plenty of time. It isn't — not if your business model currently depends on frequent low-value imports, or if you've never had to deal with customs declarations before. Supplier negotiations, logistics restructuring, and accountant conversations all take time. The businesses that come through this transition smoothly are already thinking about it now.
Sourcing Hack #1: Model your landed costs today — without the de minimis relief. Take any product you currently import under £135 per consignment and calculate what it would cost with 20% import VAT applied to the full value (goods + freight + insurance). If the revised landed cost makes the product unprofitable or uncompetitive, you need to address this well before 2028 — not at the deadline.
In practice: every shipment from overseas will require a customs declaration and will be subject to import VAT and, where applicable, customs duties — regardless of value. No more exemptions for small consignments.
What changes specifically: a customs declaration will be required for all imports, even low-value ones; import VAT at 20% will apply to the customs value of goods including freight and insurance; customs duty at the applicable tariff rate for your product's HS code will apply where it doesn't already; and administrative costs increase, particularly for businesses managing high volumes of small parcels.
The silver lining for VAT-registered businesses: import VAT is reclaimable as input tax. So if you're VAT registered and importing for business use, the 20% doesn't represent a permanent cost — it's a cash-flow consideration until your next VAT return. Non-VAT registered businesses face a starker equation.
Sourcing Hack #2: If your annual turnover is approaching £90,000 — or if you're planning to scale your importing — consider voluntary VAT registration now, ahead of the threshold changes. Being VAT registered means import VAT becomes reclaimable, which significantly cushions the blow of the policy change. Your accountant can advise on the best timing and structure.
Let's make this concrete. Say you're importing a batch of branded protein shakers from a Chinese manufacturer. The goods cost you £90 per consignment, freight is £15, and insurance is £2. Total: £107 — currently under the £135 threshold and attracting no customs duty.
Post-reform, that same consignment attracts import VAT: 20% of £107 = £21.40. Plus any applicable duty (say 6.5% on plastic goods): £107 × 6.5% = £6.96. Total additional cost: approximately £28. Per-unit, this depends on your quantities — but if you're importing 20 units per consignment, that's an extra £1.40 per unit added to your cost base.
If your margin was already tight, this matters. If you're on our White Label Package or Private Label Package and importing in consolidated volumes, the per-unit impact is usually much smaller — because the fixed cost of customs admin and freight is spread across many more units. This is one reason why moving from small frequent orders to larger consolidated shipments is worth considering.
Sourcing Hack #3: Consolidate your shipments. Instead of importing small parcels every few weeks, work with your supplier and freight forwarder to batch orders into fewer, larger shipments. You'll pay one set of customs admin costs rather than many, and your freight economics improve significantly. This single habit change can substantially offset the impact of the threshold change. Our team at Epic Sourcing helps clients build smarter ordering and shipment schedules — get in touch if you'd like to discuss your specific situation.
Preparation is everything here. The businesses that emerge from this policy change in good shape will be those that treated 2026 and 2027 as a runway for restructuring — not 2028 as a deadline to panic about.
Map out every product you currently import, the approximate value per consignment, and whether it falls under £135. Identify your exposure. This audit typically takes a few hours and gives you a clear picture of how significantly your cost base will change.
Your duty rate depends entirely on the Harmonised System (HS) code used to classify your product for customs purposes. Incorrect HS codes mean you could be overpaying duty — or, worse, underpaying and exposing yourself to HMRC scrutiny. A customs broker can verify your classifications. Don't rely on your supplier's suggestions; they classify for export, not UK import.
If you've never needed a customs broker before, find one now while you're not under pressure. A good broker handles declarations, advises on duty relief schemes, and flags compliance issues — essential as your import volumes and admin requirements grow.
Now is also a good time to review the Incoterms you're using with your suppliers. EXW or FOB terms, where you take responsibility for import clearance, give you more control and often better economics. Read our guide to importing from China to the UK for a full Incoterms breakdown. You might also find our posts on importing from Alibaba to the UK and safety checks before your first Alibaba purchase useful.
Sourcing Hack #4: Check whether your products qualify for reduced or zero duty rates under UK trade agreements. The UK–Vietnam Free Trade Agreement (UKVFTA), for instance, offers reduced duty rates on qualifying goods. China does not have an FTA with the UK, but HS code-level duty rates still vary enormously by product. Getting this right could save you thousands of pounds annually.
Yes — and potentially significantly. Many Amazon FBA sellers in the UK have built sourcing models on frequent low-value imports from Alibaba or direct suppliers, relying on the de minimis exemption to keep costs down during the test-and-iterate phase of product development.
Those who have already scaled to importing full pallets or containers into Amazon's fulfilment centres are largely already dealing with customs formalities and will be less disrupted. It's the sellers still importing small quantities frequently who will feel the change most acutely.
If you're looking to transition from small-order importing to a more structured sourcing model — with supplier vetting, consolidated shipments, and QC built in — our Private Label Package and Secret Label Package are worth exploring. Also see our post on how small businesses can cut costs by sourcing directly.
The de minimis threshold is the import value below which customs duties are not charged. The UK's threshold has been £135. Goods worth less than £135 have been exempt from customs duties — though import VAT rules for B2C sales were updated in 2021. The government is now planning to abolish this threshold entirely.
The UK government has signalled a phased removal, with full implementation expected by 2028. The exact timeline of intermediate steps may vary, so UK importers should monitor HMRC announcements and begin preparing now rather than waiting for firm dates.
Yes, in most cases. Once the threshold is removed, all imports — regardless of value — will attract import VAT (currently 20%) and applicable customs duties. VAT-registered businesses can reclaim import VAT as input tax, reducing the net cash impact. Non-VAT registered businesses will face a permanent additional cost.
The UK Global Tariff is publicly available at trade.gov.uk. You can search by HS (Harmonised System) code to find the duty rate applicable to your product category. Correct HS code classification is essential — get an independent check from a customs broker rather than relying on your supplier's export classification.
Yes. Large businesses importing in bulk are already fully subject to customs formalities and therefore less disrupted. Small businesses that import frequently in low values — often under £135 per consignment — will face the biggest structural change, as they'll need to begin managing customs declarations for every import.
Absolutely. A good sourcing agent helps you consolidate orders, manage supplier relationships, coordinate logistics, and structure your supply chain for efficiency — all of which matter more as the regulatory environment becomes more demanding. Read our guide on how sourcing agents work and how to find reliable manufacturers in China to learn more.
The end of the £135 threshold is a meaningful shift — but it's not a crisis if you prepare. The businesses that thrive through this change will be those that use the next two years to build smarter supply chains: consolidating shipments, getting their HS codes right, working with customs brokers, and transitioning from ad-hoc importing to structured sourcing relationships.
At Epic Sourcing, we help UK businesses import intelligently from China and Vietnam — with supplier vetting, quality control, and logistics support all built in. Whether you're starting out or scaling, we can help you build a sourcing model that's ready for what's coming.
Let's talk about your supply chain. Book a free consultation with the Epic UK team or email us at hello@epicsourcing.co.uk.
TK Wang, Founder & Director @ Epic Sourcing
