Government Reviews Tax Loophole Allowing Shein and Temu to Undercut UK Retailers
The UK government is reviewing a controversial tax rule that allows overseas retailers to send goods under £135 into the country without paying import duties — a system critics say is crippling British high street businesses.
Retailers including Sainsbury’s, Currys, and former Dragon’s Den star Theo Paphitis have welcomed the review, arguing that global e-commerce platforms such as Shein, Temu, and Alibaba are flooding the UK with low-cost goods and avoiding the taxes domestic sellers must pay.
Paphitis told the BBC the rule was “ruining our retail landscape” and leading to job losses. The British Retail Consortium echoed those concerns, citing an increase in potentially unsafe or non-compliant products entering the UK.
However, the Federation of Small Businesses (FSB) has urged caution, noting that 16% of small business imports fall below the £135 threshold. Removing the exemption could raise costs for small firms and drive up consumer prices.
The debate mirrors action in the US, where President Trump recently scrapped a similar rule, imposing charges on goods under $800, leading to price hikes on platforms like Shein.
The UK Treasury’s review signals a shift towards tightening border controls to protect domestic markets from cheap, potentially dumped goods — a move that could significantly reshape online retail.
