The UK is removing the customs duty relief on low value imports. Right now, apart from excise goods such as alcohol and tobacco, goods that arrive in a consignment worth £135 or less enter the UK free of customs duty. By October 2028 at the latest, that relief ends, so customs duty will apply to these parcels for the first time. VAT on these goods still applies 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 by October 2028 at the latest. A consultation on the design of the new customs arrangements ran from 26 November 2025 to 6 March 2026, and the government published its response on 13 July 2026.
The response settles most of the design. The seller, or the online marketplace where it facilitates the sale, will be responsible for paying the duty and will send HMRC item-level data on each parcel. Duty will be charged at the standard UK Global Tariff rates, with no simplified tariff. A new fee is coming, but the government has not yet set the amount. Sellers and marketplaces without a UK presence are expected to have to appoint a fiscal representative. Two things are still open: the government is still considering how VAT on these imports should be collected, and it has not yet responded to a separate consultation, closed on 18 August 2026, on making online marketplaces liable for the VAT on sales by UK-based businesses.
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 the government has confirmed for when the relief is removed.
| Feature | Now | By October 2028 |
|---|---|---|
| Customs duty on goods worth £135 or less | None, the relief applies | Relief removed, duty charged at the standard UK Global Tariff rate for the goods |
| Import VAT | Applies (supply VAT at point of sale, or via the marketplace) | Still applies; how it is collected is still under consideration |
| £135 threshold basis | Intrinsic value of the whole consignment | No change announced |
| Who handles the charge | Seller or online marketplace | Seller or online marketplace pays the duty and supplies item-level data to HMRC; a new fee is planned, amount not yet set |
| 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 consultation on making online marketplaces liable for the VAT on sales by UK-based businesses, as they already are for certain sales by overseas sellers. 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 per cent rate, while many clothing lines, such as cotton T-shirts, carry 12 per cent, so the impact depends entirely on what you sell and how it is classified. Check your own commodity code.
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 per cent:
- Customs duty today: £0, because the £135 relief applies.
- Customs duty once the relief ends: £20 x 12% = £2.40 per unit.
Under today's rules, duty is worked out on the price of the goods plus postage, packaging and insurance, so the real figure is likely to be a little higher. That £2.40 or so 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 per cent 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.
- Plan for the confirmed design: you or your marketplace will pay the duty at the full UK Global Tariff rate and send HMRC item-level data. Watch for the amount of the new fee, which the government has not yet set.
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 by October 2028 at the latest. 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, and the government published its response on 13 July 2026.
Does the £135 change affect import VAT?
Not directly. The reform removes the customs duty relief. VAT on goods of £135 or less still applies, generally as supply VAT charged at the point of sale by the seller, or accounted for by the online marketplace. The government has said it is still considering how VAT on these imports is collected, so watch for changes there.
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 seller, or the online marketplace where it facilitates the sale. The government confirmed this in its July 2026 consultation response, along with item-level data reporting to HMRC, the standard UK Global Tariff rates (no simplified tariff) and a new fee whose amount is still to be set. Build the duty into your landed cost now.
Sources
- GOV.UK: Reforming the customs treatment of low value imports into the UK
- GOV.UK: Reforming the customs treatment of low value imports, consultation response (13 July 2026)
- 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
