Low Value Imports UK: How eCommerce Businesses Can Prepare Financially & Operationally

Low value imports are goods entering the UK in a single consignment worth £135 or less. Right now these imports are free of customs duty, but that is about to change. The government has confirmed it will remove the £135 customs duty relief by October 2028 at the latest, meaning parcels that were once duty free will start to carry extra charges.

A product is selling well, consumer demand is increasing, and your eCommerce company is at last starting to see strong profit margins. Then your revenues on each order are subtly decreased due to an unforeseen increase in import charges.

Importing low-value goods from foreign vendors has proven to be a wise strategy for many UK eCommerce merchants to source products affordably. The straightforward strategy of buying cheap and selling online is getting more complicated due to shifting import procedures, customs regulations, and VAT rules, and a major duty change now confirmed for 2028.

Early preparation will put firms in a better position to manage cash flow, safeguard their profits, and prevent operational disruptions. This blog examines the implications of low-value import adjustments for UK eCommerce companies and the doable actions they can take to maintain their competitive edge. 

What Are Low Value Imports? 

A shipment that arrives in the UK with an inherent worth of £135 or less is considered a low value import. 

Three points matter for how the threshold is measured: 

• It is the consignment value, not the item value: Five items worth £30 each in one parcel is a £150 consignment, not five £30 imports. 
• Intrinsic value: Taxes, insurance, and shipping are not included in the computation.
• HM Treasury will have the power to amend the definition of a low value import through secondary legislation, so the £135 figure is not fixed indefinitely, and the customs duty treatment of this threshold is itself changing from October 2028.

Clothing, jewelry, cosmetics, phone and technology accessories, and small home products are typical low-value imports for UK online retailers; these are high-frequency, inexpensive items where a few pounds of duty every delivery significantly alters the margin.  

Understanding the Low Value Import Threshold in the UK 

eCommerce companies’ handling of VAT and customs when importing items into the UK is impacted by the low value import threshold. Important points are as follows: 

• Determines VAT treatment: When and how VAT is imposed or reported can depend on the value of imported items. 

• Determines duty treatment: From October 2028 at the latest, the customs duty relief on consignments of £135 or less is being removed, meaning duty will start to apply to shipments that are currently duty free.

• Impacts ecommerce pricing: Import expenses, VAT requirements, customs duty from 2028, and customs fees can affect product margins and selling prices.

• Requires accurate records: Companies should keep accurate VAT records, invoices, and import documents. 
• Affects cash flow planning: Regular imports may result in extra expenses that should be taken into account when making financial plans. 

• Rules may change: To remain compliant with the most recent import regulations, eCommerce companies should keep an eye on HMRC developments, particularly HMRC’s July 2026 guidance confirming the new customs arrangements for low value imports.

How VAT and Customs Duty on Low Value Imports Have Changed, and What Is Coming in 2028

In the past, some low-value imports into the UK were eligible for VAT relief under Low Value Consignment Relief (LVCR). But in 2021 this exception was eliminated, many low-value imports are now subject to new VAT regulations. 

That 2021 change was about VAT. A separate and much larger reform is now underway on the customs duty side. At Autumn Budget 2025, the government confirmed it will remove the £135 customs duty relief entirely. Draft legislation was published on 13 July 2026, and the change will come into force by October 2028 at the latest, brought forward from an earlier March 2029 target. Import VAT itself is not changing, it will continue to apply as it does today. What is changing is that customs duty, which currently does not apply to consignments of £135 or less, will start to apply once the new arrangements take effect.

Key points for eCommerce businesses: 

• VAT obligations have increased: Companies who import low-value goods now have to think about the requirements for VAT collection, reporting, and compliance. 

• Duty obligations are coming: Businesses that currently treat sub £135 consignments as duty free need to plan for duty applying to those same shipments from October 2028 at the latest.

• Impact on overseas sellers: When supplying items to UK customers, foreign vendors need to assess their UK VAT and future duty obligations.

• eCommerce models may be affected: Pricing, fulfillment, and VAT and duty procedures are required to be reviewed by online marketplaces, direct-to-consumer vendors, and international companies. 

• Greater Compliance Requirements: Businesses must maintain accurate records and follow updated VAT and custom rules to avoid penalties and delays. 

• Customer Pricing Impact: Changes in VAT and the incoming charges can have an impact on product prices, shipping fees, and UK consumer’s overall purchasing experiences. 

How eCommerce Businesses Can Prepare Financially 

• Review VAT and duty Processes: To maintain compliance, evaluate VAT and upcoming duty obligations, registration requirements, and reporting processes on a regular basis. 

• Maintain Accurate Records: For easy reporting, maintain thorough records of all sales, imports, costs, and VAT transactions. 

• Use Reliable Accounting Software: Use tools to automate financial administration, reporting, and VAT tracking. 

• Work With eCommerce Accounting Experts: To handle complicated VAT and customs regulations and increase financial accuracy, seek expert advice. 

• Update Pricing Strategies: To maintain profitability and account for VAT and duty changes, review product pricing ahead of the 2028 deadline rather than waiting for it to take effect. 

How eCommerce Businesses Can Prepare Operationally 

• Integrate Accounting and Ecommerce Platforms:  For precise financial tracking, link accounting software to sales channels. 

• Improve Record-Keeping Systems:  Keep well-organised records of shipments, sales, invoices, and VAT-related transactions. 

• Map customs duty exposure: Identify which products and suppliers currently rely on the sub £135 duty exemption, so the business knows exactly where new costs will land once the relief is removed.

• Monitor Marketplace Requirements: Keep up on VAT regulations and requirements on marketplaces like Amazon, Shopify, and others. 

• Train Internal Teams: Make sure employees are aware of the most recent VAT regulations and operational modifications. 

Common Mistakes Businesses Make When Managing Low Value Imports 

Changes in VAT legislation, rules on customs and increased monitoring of foreign suppliers have made low-value imports into the UK more complicated. Many eCommerce firms are making mistakes that can lead to unexpected costs, shipping issues, compliance problems, and inaccurate VAT reporting. The most frequent errors include:

• Assuming Low Value Imports Are Automatically VAT-Free: The common misconception is that products under a certain amount are not subject to VAT. The majority of low-value imports entering the UK are subject to VAT regulations since Low Value Consignment Relief (LVCR) was eliminated in 2021. Companies need to know if VAT is levied at import depending on the type of shipment or collected at checkout through programs like the Import One Stop Shop (IOSS) for Northern Ireland movements. 

• Assuming the £135 threshold will always mean duty free: Businesses that have built pricing or sourcing decisions around the current duty exemption need to revisit those assumptions, since the exemption itself is being removed by October 2028 at the latest.

• Incorrect VAT Registration and Reporting: Sometimes while selling on websites like Amazon, Shopify, or eBay, businesses neglect to register VAT on imported goods. Inaccurate VAT returns and possible HMRC compliance issues might arise from improper import VAT treatment, delayed import VAT accounting, or marketplace VAT obligations. 

• Using Incorrect Customs Declarations: It is common to provide incorrect country-of-origin information, values, commodity codes (HS codes), or product descriptions. Inaccurate customs declarations may lead to further inspections by HM Revenue & Customs (HMRC), incorrect duty estimates, or items being detained at the border. 

• Poor Record Keeping for Imported Goods: Import invoices, customs declarations, shipping documentation, and VAT computations are not all kept up to date by certain companies. Accurate accounting and answering any HMRC questions depend on proper documentation. 

• Not Understanding Marketplace VAT Responsibilities:When selling on internet marketplaces, some foreign vendors believe they are in charge of managing all VAT regulations. However, according to UK VAT regulations marketplaces are required  to collect VAT on some imported goods that are worth £135 or less. Companies should be aware  about when they need to manage their own VAT obligations and when the marketplace handles VAT collection. 

A Financial & Operational Readiness Checklist for Low Value Imports UK 

Businesses must have operational controls and clear financial procedures in place to handle low-value imports into the UK. Customs delays, VAT issues, and unforeseen expenses can all be prevented with an appropriate checklist. Companies thought to examine the following areas: 

• Confirm VAT, customs duty, and customs responsibilities: Understand who is responsible for collecting and reporting VAT and, from 2028, duty, whether that is your business, courier, or online marketplace. Also verify whether import VAT, customs duty, or marketplace VAT rules apply to your goods, and when the new duty rules will start to apply to your shipments.

• Review Product Classification and Customs Codes: Make sure each product has the accurate country of origin, description, and commodity code. Inaccurate duty computations and delays during customs clearance can be avoided with accurate classification. 

• Update Accounting Systems: Make sure your accounting program can accurately document VAT transactions, imported items, and associated costs. Financial reporting and VAT returns are less error-prone when properly configured. 

• Calculate the Full Import Cost: Take into account all associated expenses, such as the cost of the product, delivery, import VAT, customs duty once it applies, courier fees, and handling. Businesses can safeguard their profit margins by knowing the exact landed cost both today and under the post 2028 rules.

• Train Teams on Import Compliance: Current UK import regulations, documentation needs, and VAT and customs duty obligations should be understood by staff overseeing purchasing, finance, and eCommerce operations. duties should be understood by staff members overseeing purchasing, finance, and eCommerce operations. 

• Monitor Supplier and Marketplace Processes: Examine on a regular basis how marketplaces, fulfillment partners, and foreign suppliers manage VAT and customs obligations. Duplicate VAT charges or inaccurate declarations can be avoided with clear communication. 

• Review Processes Regularly: Import rules in the UK are always changing, with the customs duty relief change alone due to land by October 2028 at the latest, so businesses should periodically assess their processes to stay compliant and prevent supply chain disruptions.

How E2E Accounting Helps eCommerce Businesses Prepare

eCommerce companies need to manage low value imports by keeping correct records, understanding their VAT and customs duty obligations, and controlling expenses. VAT compliance, bookkeeping, transaction reconciliation, and reporting are just a few of the eCommerce accounting services E2E Accounting offers to help online sellers manage their financial operations.

E2E Accounting assists companies in more precisely tracking sales, expenses, import costs, and VAT transactions thanks to its experience with platforms like Amazon, Shopify, eBay, and WooCommerce. Their team makes sure financial data is organised, helping eCommerce companies make informed decisions and stay ready for evolving UK tax and compliance rules, including the customs duty changes coming into force by 2028.

Businesses can improve financial visibility, reduce manual errors, and build more robust processes for handling imports, sales, and overall eCommerce growth by partnering with specialised eCommerce accountants.

Conclusion

Low value imports into the UK are entering a genuine turning point. The 2021 VAT changes already reshaped how eCommerce businesses handle sales tax on these goods, and a bigger shift is now confirmed for the customs duty side, with the £135 duty relief being removed by October 2028 at the latest. To avoid unforeseen costs or compliance problems, eCommerce companies must understand their responsibilities on both VAT and duty, keep correct records, and review their financial procedures well ahead of the deadline.

Businesses can manage imports more effectively while protecting their profit margins by planning ahead and putting the right mechanisms in place. Working with experienced eCommerce accountants can give online sellers more control over bookkeeping, financial planning, and VAT reporting, letting them focus with confidence on growing their businesses.

FAQs: Frequently Asked Questions