The UK is removing the customs duty relief on low value imports. Right now, goods that arrive in a consignment worth £135 or less enter the UK free of customs duty. From October 2028, that relief ends, so customs duty can apply to these parcels for the first time. Import VAT is not changing and still applies exactly as it does today.
For UK online sellers who import stock, dropshippers who ship straight from overseas suppliers, and marketplace sellers sourcing goods abroad, this is a real change to landed costs. This guide explains what the £135 relief is, exactly what is changing and when, why the government is acting, who it affects, and the practical steps to take now.
What is the £135 low value import relief?
The £135 low value import relief lets goods enter the UK free of customs duty when the whole consignment is worth £135 or less. The £135 is the intrinsic value of the goods, excluding transport, insurance and any taxes. It applies to the total value of the consignment, not to each separate item inside it.
Two charges are easy to confuse here, so it helps to separate them:
- Customs duty: currently not charged on consignments of £135 or less, because of the relief that is being removed.
- Import VAT: still due. Since the January 2021 overseas goods reforms, VAT on goods of £135 or less is generally charged as supply VAT at the point of sale by the seller, or accounted for by the online marketplace where the sale goes through one. This is unchanged by the reform.
For consignments worth more than £135, normal import VAT and customs duty already apply at the border. If you want the mechanics of how these two charges interact for imported stock, see our guide to customs duty versus import VAT and how postponed VAT accounting works for importers.
What exactly is changing, and when?
At Autumn Budget 2025 the government announced it would remove the £135 customs duty relief by March 2029 at the latest. On 23 June 2026 it brought that date forward by six months, so the relief now ends in October 2028. A consultation on the design of the new customs arrangements ran from 26 November 2025 to 6 March 2026.
The consultation covers how the replacement system should work, including what data is collected on each parcel, how the tariff is applied, whether to add an administration fee on low value imports, and possible changes to how VAT is collected. Alongside it, the government said it is reviewing and extending the online marketplace VAT rules to make sure overseas businesses comply with UK VAT.
Current rules versus the new rules at a glance
The core change is narrow but important: customs duty relief disappears, while import VAT stays the same. The table below sets out what applies to a parcel of £135 or less today, and what is expected once the relief is removed in October 2028.
| Feature | Now (until October 2028) | From October 2028 |
|---|---|---|
| Customs duty on goods worth £135 or less | None, the relief applies | Relief removed, duty can apply at the UK Global Tariff rate for the goods |
| Import VAT | Applies (supply VAT at point of sale, or via the marketplace) | Unchanged, still applies |
| £135 threshold basis | Intrinsic value of the whole consignment | Under review in the consultation |
| Who handles the charge | Seller or online marketplace | Being redesigned (item level data, possible admin fee) |
| Consignments over £135 | Import VAT and customs duty at the border | No change |
Why is the government removing the relief?
The government says the relief no longer works in a world of very high parcel volumes. Cheap goods sent directly from overseas can arrive duty free, which it argues undercuts UK high street retailers and distorts fair competition. Removing the relief is presented as levelling the playing field for domestic businesses that already pay duty on their stock.
The same announcement was paired with a crackdown on what the government called "dodgy online sellers", including a review of how the online marketplace VAT rules can be extended so that overseas traders selling into the UK comply with UK VAT. The direction of travel is clear: less relief, more data, and more responsibility pushed onto sellers and marketplaces.
Who does the change affect?
The change affects anyone bringing low value goods into the UK. That includes online retailers importing stock in small consignments, dropshippers whose supplier posts items straight to the UK customer, and Amazon or TikTok Shop sellers sourcing products from overseas. Consumers buying cheap goods direct from foreign websites may also see higher final prices.
If you run any of these models, your exposure depends on how much of your range is imported in consignments of £135 or less. Our guides to dropshipping tax in the UK, overseas TikTok Shop sellers and UK VAT, and Shopify dropshipping, import VAT and EORI cover how these supply chains are taxed today.
How much could this add to your costs?
The extra cost is the customs duty that was previously relieved. Duty is charged as a percentage of the goods value, set by the commodity code under the UK Global Tariff. Many products carry a 0% rate, but clothing and footwear are commonly around 12%, so the impact depends entirely on what you sell and where it is classified.
Here is a worked example. Say you import a clothing item that costs you £20 a unit, and the duty rate for its commodity code is 12%:
- Customs duty today: £0, because the £135 relief applies.
- Customs duty from October 2028: £20 x 12% = £2.40 per unit.
That £2.40 is a new cost added to every unit of landed stock. On a £45 retail price, it quietly eats into your gross margin unless you re-price. Import VAT does not change in this example: the 20% that already applied still applies, so the genuinely new number is the duty. Always confirm the exact rate for your product on the UK Global Tariff, and model the effect on your numbers with our ecommerce tax calculator before setting prices.
How should online sellers prepare now?
You have time before October 2028, but the sellers who plan early will protect their margins best. Start by mapping which of your products are imported in low value consignments, then work out the future landed cost of each so nothing is priced on today's duty free assumption. Small changes made calmly now beat a scramble later.
- Identify the correct commodity code and duty rate for each imported product on the UK Global Tariff.
- Recalculate landed cost and gross margin with the future duty added, then review pricing.
- Check whether shifting to UK or EU based stock, or bulk importing, changes your duty position.
- Make sure your VAT registration and import processes are in order, using our ecommerce VAT registration guide.
- Watch the consultation outcome for who becomes liable and how the new item level data and any admin fee will work.
Do you need an EORI number?
To import goods into the UK in your own name you generally need an EORI number starting with GB. If you already import consignments over £135 you will have one. Dropshippers who currently rely on suppliers posting sub-£135 parcels directly may need to review their setup as the arrangements change. Our accounting service for ecommerce sellers can check where you stand.
Get your import costs reviewed
If you import stock or dropship into the UK, it is worth pressure testing your margins against the 2028 change now rather than being surprised by it. Zmartly is a CIMA-regulated firm, and our qualified accountants (ACMA, CGMA, ACCA, FCCA) work with online sellers on VAT, import costs and pricing every week. Book a free call with Zmartly and we will map your exposure and the steps to protect your profit.
Frequently asked questions
When is the £135 import duty relief ending?
The customs duty relief on low value imports of £135 or less is being removed in October 2028. The government originally announced removal by March 2029 at the latest at Autumn Budget 2025, then brought it forward by six months on 23 June 2026. A consultation on the new arrangements ran until 6 March 2026.
Does the £135 change affect import VAT?
No. The reform only removes the customs duty relief. Import VAT on goods of £135 or less is unchanged and still applies, generally as supply VAT charged at the point of sale by the seller, or accounted for by the online marketplace. Only the duty position changes from October 2028.
What is the £135 low value import threshold?
The £135 threshold is the intrinsic value of the whole consignment, meaning the price of the goods excluding transport, insurance and any taxes. It applies to the total consignment value, not to each item inside it. Goods worth more than £135 already attract import VAT and customs duty at the border.
Who will have to pay the new import duty?
The exact mechanics are being decided in the consultation, and are expected to rely on item level data with liability sitting on sellers or online marketplaces, possibly alongside an administration fee. In practice, the duty becomes part of the landed cost for anyone importing low value goods, so sellers should plan for it in their pricing.
Sources
- GOV.UK: Reforming the customs treatment of low value imports into the UK
- GOV.UK: Government backs high street with acceleration of cheap import reforms
- GOV.UK: VAT and overseas goods sold directly to customers in the UK
- GOV.UK: Tax and customs on goods sent from abroad
- GOV.UK: Trade Tariff, look up commodity codes and duty rates
