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Removing the UK’s tariff exemption for low value imports could risk pushing up prices, reduce trade intensity and damage small businesses, a leading trade body has warned.
The British Chambers of Commerce’s (BCC) warning comes amid the government considering the move after the US removed its ‘de minimis’ exemption for certain commercial shipments.
The EU has also said it will do the same and introduce new handling charges for cheaper packages as well.
UK trade rules have allowed goods valued at £135 or less to enter the country without paying customs duties, although VAT still applies at the point of sale.
In November, the government announced plans to phase out this exemption by March 2029, in a bid to create a level playing field for domestic importers.
Consumers to bear the burden
But, the move would drain UK goods importers’ pockets, forcing consumers to take on the burden in some instances.
According to research by the BCC Insight Unit, half of importers admitted that if their import costs increased by five to ten per cent on small shipments, they would have to pass on the costs to consumers.
Just 20 per cent said they would be able to absorb them.
Meanwhile, nearly a quarter said an increase in costs by ten to 15 per cent due to the removal of other countries ‘de minimis’ exemptions, would put more than half of their overseas sales at risk.
Others would be forced to switch supplier, consolidate shipments or scale down activity, which could ultimately reduce overall trade volumes.
A government consultation into the plans closed 6 March, with the BCC responding that while the UK must respond to actions taken by the EU and US, reforms must be proportionate.
Reforms must also align with the international response and focus on enforcement rather than blunt cost increases the trade body urged.
Urging ministers
William Bain, head of trade policy at the British Chambers of Commerce, said: “E‑commerce matters greatly to the UK economy and global trade. We know the trend globally is to abolish de minimis thresholds and levy duties on low value imports given their huge growth in recent years.
“This will put our exporters’ sales under pressure, and we must respond to ensure we have a level-playing field.
“But we would urge Ministers not to introduce charges per item or consignment by import… the increased costs will feed through into higher prices.”
Bain also urged the government to retain VAT being charged at the point of sale, arguing its “retention would avoid unnecessary complications and additional friction”.
He added that the removal of the de minimis exemption should be “carefully phased in” to avoid new flat-rate fees and stay focused on targeted enforcement in order to protect consumers and support SMEs.
