The UK Government (HMRC) has confirmed that the \u00a3135 customs duty relief for Low Value Imports (LVIs) will be removed, with new customs arrangements to be introduced by October 2028 at the latest.<\/p>\n
This reform follows significant growth in low value e-commerce imports into the UK. The volume of consignments using the current low value arrangements has more than tripled in recent years, increasing both the compliance risks associated with the existing system and concerns around competition between UK and overseas retailers.<\/p>\n
\u00a0This can result in an imbalance on how customs duties are applied. For example, a UK retailer importing goods in bulk may incur customs duty, while an overseas retailer sending goods directly to individual UK private consumers can benefit from the relief where the relevant conditions are met.<\/p>\n
The UK is not alone in reconsidering the treatment of low value e-commerce imports. From 1st July 2026, the EU introduced an interim \u20ac3 customs duty on goods in small consignments valued below \u20ac150, with the duty fee applied to each different category of item according to its tariff classification. This applies ahead of the permanent removal of the EU’s \u20ac150 customs duty relief threshold, as discussed in our article \u201cEU\u2019s \u20ac3 Import Levy: Balancing Reform with Practical Implementation\u201d<\/em>.<\/p>\n Against this background, the UK has brought forward its implementation timetable by six months, from March 2029 to October 2028 at the latest.<\/p>\n How will the new Low Value Import regime work?<\/strong><\/p>\n Rather than simply removing the relief and requiring every low value parcel to follow the standard customs process, HMRC intends to introduce dedicated arrangements for consignments valued at \u00a3135 or less.<\/p>\n Under the new model, sellers or online marketplaces which facilitate the sale of such goods will be responsible for the customs duty due. Customs duty will be paid to HMRC on a quarterly basis after the goods enter the UK, separating the payment of customs duty from the physical movement of individual parcels across the UK border.<\/p>\n Sellers and online marketplaces will also be required to provide additional item level information on the goods being imported, with the detailed data and administrative requirements still to be finalised.<\/p>\n The new legislation also introduces the concept of a UK based fiscal representative, who would assume joint and several liability for customs debts incurred by an overseas seller under the new arrangements. Further details on the circumstances under which a fiscal representative will be required are expected to be published in the coming months.<\/p>\n Certain goods will remain outside the scope of the revised structure, including excise goods and certain goods subject to restrictions or trade defence measures. The existing customs duty relief for qualifying non-commercial consignments sent from one private individual to another, and valued at \u00a339 or less, will also be retained.<\/p>\n Although the overall direction of the regime is now clearer, the details are not yet finalised. Further legislation and HMRC guidance will be required on areas including data, compliance and the administration.<\/p>\n How will the changes interact with VAT?<\/strong><\/p>\n For overseas retailers, an important question will be how the new customs regime operates alongside the existing VAT treatment of low value sales.<\/p>\n Under the current rules, where goods are outside the UK at the point of sale and are sold directly to consumers in the UK in consignments valued at \u00a3135 or less (net), the overseas seller is generally required to charge UK VAT at the point of sale, and report same through a UK VAT return.<\/p>\n Where a sale of goods in a consignment with a net value of \u00a3135 or less is facilitated by an online marketplace, the marketplace is generally responsible for accounting for the VAT on the sale. Different rules apply to sales to UK VAT-registered businesses and to certain transactions involving Northern Ireland.<\/p>\n HMRC has not yet finalised how the future customs arrangements will interact with the existing VAT collection process. This will be an important area to monitor as further legislation and guidance are published, particularly for overseas sellers already registered for VAT in the UK and reporting low value sales.<\/p>\n Could the reform change how foreign businesses sell to the UK?<\/strong><\/p>\n The additional costs associated with low value imports may cause businesses to review whether their existing fulfilment arrangements remain commercially appropriate.<\/p>\n For example, an overseas retailer currently sending individual consignments directly to UK consumers may wish to reassess its existing supply chain once the additional customs duty and financial implications of the new regime are known. For businesses with significant UK sales volumes, this could include comparing the existing direct-to-consumer model with alternative fulfilment arrangements, such as importing goods in bulk and holding stock in the UK.<\/p>\n While goods imported in bulk would still be subject to UK customs duty, businesses with significant UK sales volumes may wish to consider whether holding stock in the UK could provide cost efficiencies when fulfilling UK orders. Rather than sending each customer order from overseas, goods could be imported in larger consignments and then distributed to customers from stock held in the UK. This may reduce the cost of international shipping and the administrative and handling costs associated with individual cross border consignments. Foreign businesses could therefore consider the costs of continuing to fulfil orders from overseas compared with holding stock in the UK, taking into account customs duty, freight, warehousing and fulfilment costs.<\/p>\n Considerations<\/strong><\/p>\n Any such comparison should consider the overall commercial costs of each model as well as the potential VAT consequences.<\/p>\n \u00a0Where goods are imported into the UK in bulk, import VAT may become due at the point of importation. The business should establish which entity is responsible for the import and, importantly, which entity is entitled to recover the import VAT. \u00a0The entity importing the goods is not necessarily the owner of the goods or the entity entitled to deduct the import VAT. The ownership of the goods, contractual arrangements, VAT registration and subsequent supply should therefore be considered together to establish which entity has the appropriate entitlement to recover the import VAT and holds the supporting evidence required.<\/p>\n For UK VAT-registered businesses, Postponed Import VAT Accounting (PIVA) may allow import VAT arising on the bulk imports to be accounted for and recovered through the UK VAT return, rather than being paid upfront at the time of importation.<\/p>\n Once the goods are held in the UK, the VAT treatment of the subsequent sales to the UK consumers will depend on how the goods are sold. Where the foreign business sells directly to the customer, the foreign business will generally be responsible for accounting for UK VAT on the sales<\/p>\n Where the goods are sold via a marketplace, the marketplace will typically be responsible for accounting for UK VAT, where the goods are already located in the UK at the time of sale, regardless of the value of the goods.<\/p>\n The foreign business will instead be treated as making a zero-rated deemed supply to the marketplace and remains responsible for any import VAT and customs duty arising from when the goods are imported into the UK. For businesses with significant UK e-commerce sales, this means that the impact of the reform should not be assessed solely by calculating the additional customs duty cost. The VAT and cash-flow consequences of any alternative supply chain model should also form part of the assessment.<\/p>\n Looking ahead<\/strong><\/p>\n There are still more than two years before the October 2028 deadline and several elements of the new regime remain to be finalised. Businesses therefore have time to assess the potential impact before making changes to their existing arrangements.<\/p>\n For overseas sellers, an initial review could identify the proportion of UK sales currently falling within the \u00a3135 low value regime, how VAT is being accounted for on those sales and the extent to which the business may be affected by the reforms.<\/p>\n Where that assessment leads a business to consider alternative fulfilment arrangements, the VAT implications should be reviewed before the supply chain is changed, particularly in relation to UK VAT registration, import VAT recovery and PIVA.<\/p>\n As further details of the new regime emerge, businesses will be better placed to compare the cost of continuing with their existing direct-to-consumer model against alternative arrangements for supplying the UK market.<\/p>\n If your business sells low value goods into the UK and requires support in understanding the VAT implications of the reforms or a proposed change to its UK supply chain, please do not hesitate to get in touch and one of our experience consultants will be happy to advise you.<\/p>\n ","protected":false},"excerpt":{"rendered":" The UK Government (HMRC) has confirmed that the \u00a3135 customs duty relief for Low Value Imports (LVIs) will be removed, with new customs arrangements to be introduced […]<\/p>\n","protected":false},"author":239137950,"featured_media":14483,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"{title}\n\n{excerpt}\n\n{url}","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[1359],"tags":[1423],"class_list":["post-14479","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-uk-vat-update"],"jetpack_publicize_connections":[],"jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pfNysa-3Lx","jetpack_featured_media_url":"https:\/\/meridianglobalservices.com\/wp-content\/uploads\/2026\/09\/ukhome_1140x360.jpg","_links":{"self":[{"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/posts\/14479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/users\/239137950"}],"replies":[{"embeddable":true,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/comments?post=14479"}],"version-history":[{"count":3,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/posts\/14479\/revisions"}],"predecessor-version":[{"id":14482,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/posts\/14479\/revisions\/14482"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/media\/14483"}],"wp:attachment":[{"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/media?parent=14479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/categories?post=14479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/meridianglobalservices.com\/fr\/wp-json\/wp\/v2\/tags?post=14479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}