UK to Remove Customs Duty Exemption by 2029

UK Plans to Remove Customs Duty Exemption by 2029

The UK Government has announced plans to remove the £135 customs duty exemption for low-value imports as part of the Autumn Budget 2025. The reform will apply to commercial consignments entering the UK and is expected to be fully implemented by March 2029.

The measure is part of a broader review of the customs treatment of low-value imports, driven by the rapid growth of cross-border e-commerce and the increasing volume of small consignments shipped directly to UK consumers.

Current Rules for Low-Value Imports into the UK

Under the current framework, goods valued at £135 or less imported into the UK can benefit from a customs duty exemption. This relief means that customs duty is not charged on these low-value imports.

Discover UK VAT E-commerce rules

Since these changes were implemented, the number of low-value consignments entering the UK has increased significantly. The government has therefore reviewed the existing customs arrangements and concluded that reforms are required to ensure the system remains effective.

Removal of the £135 Customs Duty Threshold

As announced in the Autumn Budget 2025, the UK will remove the £135 customs duty relief for low-value imports.

Once the reform is implemented, commercial consignments valued at £135 or below will no longer automatically benefit from customs duty exemption.

The government has indicated that the new framework will be introduced by March 2029 at the latest. The phased timeline reflects the need to develop a system capable of managing the high volume of low-value e-commerce shipments entering the UK.

Take a look at our Step-by-step guide on importing goods in UK

Proposed Changes to the Low-Value Import Compliance Framework

Alongside the policy announcement, the UK Government launched a consultation on the design of the new customs arrangements for low-value imports. The consultation on reforming the customs treatment of low-value imports ran from 26 November 2025 to 6 March 2026.

Stakeholders were invited to provide feedback on the design of the new framework, including:

• data requirements for customs declarations
• application of tariffs to low-value imports
• the possible introduction of administrative fees
• potential adjustments to VAT collection mechanisms

The responses will help shape the final design of the new compliance system.

Several key compliance measures are under consideration.

• Item-Level Customs Data Requirements: The new system may require item-level data in customs declarations for low-value consignments. This would increase transparency and support more accurate duty assessment.
• Marketplace and Seller Compliance Responsibilities: The consultation also considers shifting compliance obligations to online marketplaces and sellers involved in cross-border sales. Non-UK established businesses may also face new requirements, including the possible obligation to appoint a UK fiscal representative.
• Integration of Customs Duty and VAT Collection: Another proposal is to integrate customs duty collection with existing VAT processes. This approach could streamline reporting and simplify compliance for businesses involved in high-volume e-commerce imports.
• Replacement of the Current BIRDS Model: The government is also considering replacing the existing Bulk Import Reduced Data Set (BIRDS) model with a new system specifically designed to manage high volumes of low-value imports.

Part of a Wider Global Trend

The UK reform reflects broader international developments aimed at tightening the tax and customs treatment of low-value e-commerce imports.

The European Union is planning to abolish the €150 customs duty threshold as part of its wider VAT reform agenda. Similarly, the United States has taken steps to tighten the application of its $800 de minimis exemption.

These policy changes aim to protect tax revenues, reduce the risk of undervaluation, and ensure fairer competition between domestic retailers and overseas sellers.

What Businesses Should Do Now

Although the removal of the £135 threshold will not take effect until 2029, businesses involved in cross-border e-commerce into the UK should begin monitoring developments closely.

Online marketplaces, non-UK sellers, and logistics providers may face new compliance obligations once the new framework is introduced. Early preparation will help businesses adapt to changes in customs reporting, VAT collection, and potential fiscal representation requirements.

The planned removal of the £135 customs duty exemption represents a significant change in the UK’s treatment of low-value imports. The reform reflects the growing importance of e-commerce and the need for customs systems capable of handling high volumes of small consignments.