Retailers ramp up pressure on Reeves to scrap tax break for e-commerce rivals

Retailers have urged Rachel Reeves to “revitalise the high street” by speeding up plans to close a tax break which they say unfairly favours Chinese e-commerce rivals.

High street giants like Next, M&S and Primark have urged the Chancellor to impose a £2.60 flat fee on small parcels to rebalance a system which they say gives an unfair advantage to overseas operators like Temu and Shein.

Under existing rules, overseas sellers avoid paying import tax when shipping goods worth less than £135, under the “de minimis” threshold rule. 

Reeves committed to scrapping the exemption at last year’s Budget but has since pushed back the change to 2029. 

Shein, Temu trade booms

The 17 major retailers wrote to the Prime Minister and the Chancellor last week, it has emerged, saying they are “increasingly concerned” by this delay.

“The de minimis threshold has become a structural advantage for overseas retailers without a footprint in the UK, who undermine retailers that employ millions of people across the country, pay local taxes and pay import duties,” the retailers said.

Trade in low-value imports (LVIs) has boomed in recent years with the advent of Chinese e-commerce giants like Shein and Temu, growing by more than 50 per cent in the last year.

The retailers said that the government’s failure to close the loophole – while the US and the EU have done so – has meant that these e-commerce firms have increasingly targeted the UK market.

The companies – which also include Argos, Currys and Debenhams – called on the government to impose a flat £2.60 tax on all small parcel imports.

Calls to ‘revitalise high street’

This measure would “level the playing field” and “revitalise high streets” by encouraging consumers to shop at UK retailers, they said.

The government would raise £1.7bn per year from this tax, the retailers claimed, which they suggested it could use to offer Brits more cost of living support.

“In a tight fiscal environment when the UK Government is rightly planning to support hard-pressed consumers to mitigate increasing energy costs, this would be an additional vital revenue stream,” the businesses wrote.

Industry body the British Retail Consortium also signed the letter, and its boss said last year that the closed loophole would also boost safety standards.

Chief executive Helen Dickinson said: “This will help protect British consumers from the risks of imported goods that don’t meet the UK’s stringent environmental and ethical standards, while promoting fairer competition.”

The Treasury was contacted for comment.