UK to End Cheap Import Duty Relief by October 2028

On 23 June 2026, the UK government published a package of tax and customs changes on GOV.UK with a clear political message: ministers want to show they are standing with the high street, not just big online platforms. If you have ever wondered why a local shop can feel more expensive than a parcel ordered online, this is the gap they are trying to address. The announcement brings together three big ideas: ending a tax break for low-value imports sooner than planned, reviewing how VAT is collected from sellers using online marketplaces, and using extra revenue to improve business rates for high street businesses. There is also a separate housing measure on VAT and land, which matters because tax rules can slow down social housebuilding as well as retail.

The first change is about goods worth £135 or less. At Budget 2025, the Chancellor said the customs duty relief on these low-value imports would be scrapped. In plain English, that means low-cost imported goods would no longer avoid customs import duties simply because the parcel is below that threshold. According to the government's 23 June statement on GOV.UK, ministers have now brought that reform forward by six months. Instead of arriving later, the new target date is October 2028. The government says it made that move after hearing from businesses that wanted the change sooner.

**What this means for you:** this is not a ban on cheaper overseas shopping, and it does not mean every item suddenly becomes unaffordable. What it changes is the tax treatment. The government's argument is that if two businesses are selling similar goods to UK shoppers, the system should not give one an easy advantage just because the item arrives in a low-value parcel from abroad. That matters most for bricks-and-mortar retailers. A shop on your local high street pays rent, staffing costs and business rates, and it cannot redesign itself overnight every time a low-cost import undercuts it. Ministers are betting that changing the duty rules will narrow part of that gap, even if it will not solve every pressure facing town centres.

The second strand is about VAT and online marketplaces. GOV.UK says ministers are reviewing whether the current marketplace rules should be extended so that all businesses trading through online platforms comply with UK VAT rules. The focus here is not on ordinary shoppers; it is on whether sellers are paying the tax they already owe. If that sounds technical, think of a marketplace as the digital version of a busy shopping arcade. Lots of separate traders operate there, but the platform sits in the middle. The government's question is whether that middle layer should do more to help HMRC collect the right VAT from every seller using the platform.

The government says money raised from better VAT compliance would be used to improve the business rates system for pubs, restaurants, hotels and other firms that keep high streets going. Business rates are the property-based tax many commercial tenants and owners pay, so this is one of the costs local venues feel every month whether sales are good or bad. **What it means for your town:** ministers are trying to link the online tax crackdown with relief for physical businesses. That is politically smart, because it turns a hard-to-see tax rule into something people can picture: a café, a pub, a bookshop or a family-run restaurant getting a fairer deal.

The same package also opens a consultation on VAT and land used for new social housing. This may seem like a separate story, but it fits the same theme: the government says parts of the tax system no longer match how the real world works. The proposal, as set out by the government, is to focus VAT relief more clearly on land used to deliver social homes. The stated aim is to help affordable housing move faster while keeping the change balanced for taxpayers. In other words, ministers want fewer tax barriers in schemes that are meant to produce social housing.

Exchequer Secretary Dan Tomlinson said the package is meant to tackle 'unfair competition' and stop businesses that are dodging tax from damaging the high street. That tells you how the Treasury wants this story to land: not as an abstract customs reform, but as a fairness issue. We should still read that claim with care. A tax change can level one part of the playing field, but it cannot by itself fix empty shops, weak footfall, squeezed wages or changing shopping habits. If you are trying to understand the policy honestly, the best way is to hold both ideas together: the reform may help, and it may still be only one piece of a much larger problem.

So what happens next? The direction is clear, but some parts are still at consultation stage. The end of low-value import duty relief is now pencilled in for October 2028, while the VAT marketplace review and the social housing VAT plans still depend on how the government shapes the final rules. For readers, the bigger lesson is simple. Tax policy is not only about spreadsheets in Whitehall. It helps decide which businesses can compete, how town centres survive, and how quickly homes get built. That is why a technical announcement on GOV.UK matters far beyond the Treasury.