Tax on Imports under £135

Lord Leigh of Hurley Excerpts

Monday 14th July 2025 Lords Chamber

Asked by

[Lord Leigh of Hurley]

To ask His Majesty’s Government whether they plan to take action to tax imported goods worth below the £135 threshold for value added tax.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, VAT is already due on all imports into the UK. The Government are reviewing the customs arrangements for imports under £135 and are exploring the merits of reform to the online marketplace rules.

[Lord Leigh of Hurley (Con)]

My Lords, I am glad the Government are reviewing it; as the Minister is aware, the noble Lord, Lord Lucas, RAVAS, the British Retail Consortium and many others have been campaigning on this issue for many years. Now that President Trump is reducing the exemption tariff for goods into the US, there will be extra pressure on Chinese suppliers to send goods VAT and duty-free to the UK. I understand that the EU is minded to reduce the exemption to zero in 2028. Can we be assured that the United Kingdom will not wait for the EU in reducing our exemption to zero?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. Just to be clear, again, VAT is already due on all imports of goods into the UK, regardless of their value. Since 2021, VAT on imports below £135 is collected at the point of sale. There is some evidence of non-compliance, so the Government announced in April that we will review the online marketplace rules. We are engaging with stakeholders to understand the impact of any potential changes. On customs duty, given the concerns of domestic retailers about the lack of a level playing field, we have also announced a review of those arrangements. Since the Government announced the review in April, both Ministers and officials have engaged with a wide range of stakeholders on the impact and operation of the regime. The findings from that engagement will help determine the review’s next steps.