Government backs high street with acceleration of cheap import reforms and crackdown on dodgy online sellers
Quick answer
High street businesses are set to benefit from action to level the playing field as the government sets out tax and customs reforms.
HMRC announcement, 23 June 2026.
The government has set out a package of tax and customs reforms designed to level the playing field for high-street businesses, headlined by faster action on cheap imports and a crackdown on overseas online sellers that avoid UK tax. The most eye-catching change is the decision to scrap customs duty relief on low-value imports six months earlier than planned, with the new regime now due in October 2028.
For years, UK shops have complained that they are undercut by parcels shipped directly to consumers from overseas that arrive with little or no duty attached. These reforms are the government's answer to that complaint, and they will matter to retailers, online sellers and shoppers alike.
What is changing
Three strands stand out. First, the government is scrapping customs duty relief on low-value imports, meaning goods valued at £135 or less will become subject to customs import duties. Implementation has been accelerated by six months, to October 2028. Second, ministers are reviewing how VAT is collected from businesses trading through online marketplaces, and are seeking views on extending the current marketplace rules so that more overseas sellers are forced to comply with UK VAT obligations. Third, the revenue raised from improved compliance is earmarked to fund improvements to business rates, which directly benefits bricks-and-mortar premises.
Alongside the headline measures, the government is also consulting on reforming VAT on land used for new social housing, with a proposed relief focused on land used to deliver social homes.
Why the £135 threshold matters
Under the current rules, very low-value parcels can enter the UK without customs duty, a concession originally designed to save officials the administrative cost of chasing tiny sums. The explosive growth of direct-from-factory online retail has changed the picture entirely. Millions of small parcels now arrive on terms a UK shop can never match, because the shop pays duty on its imported stock, VAT on its sales, business rates on its premises and employment costs on its staff. Removing the relief means those cheap parcels will face the same duties as commercially imported goods, narrowing the price gap.
Who is affected
High-street and small retailers are the intended winners, gaining fairer competition against online-only sellers who currently benefit from the relief. Consumers who buy very cheap imported goods from overseas platforms may see prices rise once duty and VAT are applied properly at the border. Online sellers, especially those based overseas, face tougher checks on whether they are meeting UK tax obligations, and the marketplaces that host them may be handed wider responsibility for collecting VAT on their behalf. Announcing the measures, Exchequer Secretary Dan Tomlinson said: "This action tackles the unfair competition and dodgy businesses that are doing real damage to our high streets."
What it means for your business
If you import stock, now is the time to understand exactly what you pay at the border and what you will pay once the reforms land. Our import duty calculator gives you a quick estimate of duty and import VAT on goods coming into the UK. If you sell through an online marketplace, check who is responsible for the VAT on each sale, because the rules differ depending on where you and your goods are based, and the government has signalled that it wants those rules extended. Our VAT calculator is useful for checking the VAT element of your pricing either way.
Businesses hoping to benefit from the business rates improvements should keep an eye on future announcements, since the government has tied that funding to the compliance revenue these reforms are expected to raise.
What to do now
Nothing changes overnight, and October 2028 leaves time to prepare, but preparation is worth starting early. Review your supply chain and work out which of your products currently arrive under the low-value relief. Model what your landed costs look like once duty applies to consignments of £135 or less. If you compete against cheap direct imports, factor the levelling effect into your pricing plans. And if you sell online, get your VAT position reviewed now rather than waiting for the enforcement letters, because HMRC has made clear that marketplace compliance is a priority. For wider background on business taxes, our guides section covers VAT, record keeping and more.
Source: GOV.UK - official announcement
Figures and policies can change. Always confirm the latest position on GOV.UK.
Written by
Laura Michelle Davis — Chartered Tax Adviser (CTA)
ACCA · CTA (Chartered Tax Adviser) · ATT · BSc Economics, UC Berkeley
Laura Michelle Davis is a Chartered Tax Adviser (CTA) who also holds the ACCA and ATT qualifications and a BSc in Economics from UC Berkeley. She specialises in UK personal tax, covering income tax, National Insurance, self-employment and capital gains, and has built her career making complicated rules easy to follow. At TaxFly, Laura writes and edits the tax guides and explainers, checking that figures reflect current HMRC rates and that every explanation answers the question a real person is actually asking. Her goal is plain-English clarity you can trust and act on.
