The UK is moving towards a new customs model for low value ecommerce imports: overseas sellers and online marketplaces, not just parcel operators, will carry more of the duty obligation. HMRC and HM Treasury’s July 2026 policy paper says the reform will remove the £135 low value import customs duty relief and introduce new customs arrangements by October 2028 at the latest. For non-UK sellers, the most sensitive part is the proposed fiscal representative role, because it creates a UK-based party with joint and several liability for customs debts linked to low value import declarations.
This is not a rule that is already live. The current relief still matters for consignments valued at £135 or less, and secondary legislation will decide the final start date and operational detail. But ecommerce importers should treat the direction of travel as settled: duty-free routing for low value goods is being closed, and contracts between sellers, marketplaces, parcel carriers and customs intermediaries will need rewriting.
The change also narrows the gap between ecommerce parcels and conventional imports. Product classification, duty rates, trade remedies and excluded goods will become part of the low value operating model, not an occasional exception handled after a parcel is stopped. If you sell into the UK from outside the country, the preparation work starts with knowing which flows are genuinely in scope.
Key Takeaways
- The UK plans to remove the £135 customs duty relief for low value imports by October 2028 at the latest, according to HMRC and HM Treasury’s July 2026 policy paper.
- Overseas sellers and online marketplaces are expected to become responsible for customs duty payment under the new low value import system.
- A fiscal representative would be a UK-based business that assumes joint and several liability for debts incurred by an overseas seller in relation to low value import declarations.
- VAT is not the main change: the GOV.UK consultation says import VAT has already been due on goods of all values since the 2021 ecommerce VAT changes.
- Several flows are expected to stay outside the simplified low value model, including goods above £135, excise goods, goods needing licences, trade defence goods and consignments needing preference or special procedures.
- The highest-risk preparation gaps are product classification, marketplace responsibility, UK establishment status and unclear contracts with parcel operators or customs intermediaries.
What Is Changing And When
The current low value import relief gives full customs duty relief for individual consignments sent from outside the UK to UK recipients with a value of £135 or less. HMRC’s consultation material describes this as the Low Value Import, or LVI, relief that has supported simplified parcel flows. It does not remove VAT from the transaction, because VAT rules changed in 2021 so that import VAT is due on goods of all values and is normally accounted for by the seller or the online marketplace where it facilitates the sale.
The July 2026 policy paper changes the customs duty side of the model. It says the government intends to remove the £135 duty relief and introduce new customs arrangements for low value imports. The operative deadline in that latest paper is a date appointed by Treasury regulations, by October 2028 at the latest. Earlier consultation material referred to implementation by March 2029, but ecommerce operators should use the July 2026 timing when planning readiness.
The policy purpose is partly fiscal and partly operational. HMRC’s consultation analysis estimated about 600 million low value consignments were imported using the Bulk Import Reduced Data Set in 2024, around 1.6 million parcels per day. HMRC also said declared BIRDS trade value rose by more than 50%, from £3.8 billion in 2023-24 to £5.9 billion in 2024-25.
That volume explains why the reform is not a simple instruction to submit normal full declarations for every parcel. The new model is expected to keep a streamlined low value channel, but attach duty liability and better item data to the seller or marketplace. For operators familiar with customs clearance steps, the difference is that ecommerce duty accounting becomes a repeatable upstream control rather than a border exception.
Who Is In Scope
The main affected parties are overseas sellers, online marketplaces, parcel operators, customs intermediaries and UK consumers buying goods valued at £135 or less. The seller and marketplace population is the biggest change, because many businesses that previously treated UK duty as a carrier-side import issue may need to register for the new LVI system, account for customs duty and keep supporting records. HMRC’s launch transcript said sellers and marketplaces would be expected to pay customs duty quarterly under the proposed model.
Marketplaces will need to separate facilitated sales from direct seller flows. If a marketplace is deemed to facilitate the sale, the reform may put it closer to the duty payment chain, just as ecommerce VAT rules already put marketplaces into the VAT collection model in many cases. Direct-to-consumer sellers will need their own route, either through a UK establishment, a fiscal representative or another authorised arrangement once the final rules are made.
Parcel operators and customs intermediaries do not disappear from the process. They are likely to remain responsible for physical movement, border messaging, entry presentation and operational data exchange. What changes is the commercial centre of gravity: duty payment and product data quality move back towards the seller and marketplace, while parcel firms need assurance that the parties upstream have registered, classified goods correctly and funded the quarterly duty bill.
UK consumers are also in scope indirectly. Removing relief means some previously duty-free goods may carry customs duty in the landed price, depending on classification and origin. Sellers that currently advertise UK prices without a serious landed-cost model should revisit their checkout logic alongside landed cost calculation and Incoterms terms for cross-border parcels.
Fiscal Representatives: The Liability Point
A fiscal representative is not just a mail-handling address. HMRC and HM Treasury define the role as a UK-based business assuming joint and several liability for debts incurred by an overseas seller in relation to low value import customs declarations. That phrase matters because joint and several liability means HMRC can pursue the representative for debts if the overseas seller does not pay.
The consultation material says overseas sellers and online marketplaces without a physical UK presence may be required to appoint a fiscal representative with a UK presence. UK-based businesses with a permanent UK address and/or Companies House incorporation would not need to appoint one on that basis. The final test will depend on the legislation, but the commercial distinction is already clear: a UK entity will not take this role without pricing the credit, data and compliance risk.
Fiscal representation should therefore sit in procurement, finance and legal review, not just customs operations. The representative will want evidence that SKU data is complete, values are supportable, sellers are solvent and duty calculations are repeatable. If it is also asked to submit data or send duty to HMRC, the service moves closer to an outsourced compliance function with exposure to errors it did not create.
Duty, VAT And Data Flows
The reform does not make import VAT new for low value goods. The GOV.UK consultation says VAT is already due on imports of all values after the 2021 changes, with VAT accounted for by the seller or online marketplace where it facilitates the sale. The new customs question is whether a £135-or-under consignment that previously received full duty relief now attracts duty based on its commodity code, customs value and origin.
That makes product classification a core ecommerce control. Sellers need a maintained commodity-code record by SKU, not a generic category label from a product feed. Articles on commodity code classification and import duty become relevant to parcel trading, because the duty rate starts with the code and any trade remedy or preference decision starts with the same data. A workflow tool like TariffFlow can be useful where teams need to check the live tariff and keep the classification decision pack with the product record.
Data exchange will also change. BIRDS currently lets authorised parcel operators and customs intermediaries declare multiple low value imports on a single simplified declaration. HMRC’s consultation signals a move towards arrangements where sellers and marketplaces register and provide better item-level information. Even if a carrier transmits the border message, it will depend on seller data that arrives before the parcel reaches the UK.
Quarterly duty payment creates a second control loop. Sellers will need to reconcile order data, customs data, duty calculations, returns and marketplace remittances across a period rather than only at parcel release. Finance teams should expect new balance-sheet exposure, and logistics teams should expect carriers to withhold services or charge risk premiums if registration and fiscal representation are unclear.
Exclusions That Need Separate Routing
Not every parcel under £135 is expected to qualify for the new low value arrangements. The consultation launch transcript says the system will not cover consignments above £135, goods subject to non-ad valorem rates, goods requiring licences or certificates, excise goods, goods subject to trade defence measures, and cases needing preference, relief or special procedures. Those flows should use standard import processes instead of being forced through the simplified channel.
The above-£135 exclusion is straightforward but commercially awkward. A basket, bundle or shipment consolidation decision can move a consignment outside the low value rules. Ecommerce platforms therefore need rules for splitting consignments, identifying order values and preventing accidental routing through the wrong customs process.
Controlled and excise goods need more active screening. Alcohol, tobacco, energy products, regulated chemicals, foods needing health certificates and licensed goods can create requirements that a normal parcel data set cannot satisfy. Sellers should map these products against import and export licence controls before they promise a delivery option to UK consumers.
Trade defence measures are particularly important because they depend on classification, origin and product description. A low order value does not neutralise an anti-dumping or countervailing measure if the goods are caught. Where a category carries trade remedy risk, sellers should classify at SKU level and keep origin evidence before accepting UK orders.
Preparation Checklist For Sellers And Operators
Start with a product-range audit. Build a list of all SKUs sold to UK consumers, the seller of record, marketplace channel, country of dispatch, customs value method, commodity code, origin and any licensing or trade remedy flag. The goal is to find products that cannot use the low value arrangements before they become live orders.
Then map responsibility by channel. A direct Shopify-style sale, an online marketplace sale and a fulfilment-by-marketplace sale may create different duty, VAT and data obligations. Your contract should say who registers for the new LVI system, who appoints any fiscal representative, who pays quarterly duty, who corrects errors and who funds post-import assessments.
Next, test UK establishment status. If the seller has a UK company, branch or permanent address, it may not need a fiscal representative merely for UK presence reasons. If it has no UK establishment, budget for fiscal representation early and expect the representative to request credit checks, data access, indemnities and audit rights.
Parcel operators and customs intermediaries should update onboarding questionnaires before the rules start. They will need to know whether a seller is registered, represented, excluded from the low value model or using standard declarations. They should also define what happens when SKU data is missing, duty is underfunded or a product falls into a licence or trade defence exclusion.
Finally, keep implementation dates under review. The deadline is October 2028 at the latest, but the live date will be appointed by Treasury regulations and may be preceded by registration or testing. Treat 2027 as the year for systems design and contract changes, with 2028 reserved for testing, supplier certification and customer-price changes.
Common Mistakes To Avoid
Do not present the rules as already in force. The relief remains part of the current system until the appointed commencement date, and operational detail will depend on secondary legislation. Prematurely charging customers a duty amount without clear contractual and tax treatment can create consumer-law and reconciliation problems.
Do not treat the fiscal representative as a low-cost address service. The role is built around UK presence and liability for customs debt, which means reputable providers will price risk and require controls. If the seller cannot provide accurate SKU data, the representative may refuse the appointment or restrict the product range.
Do not assume the carrier will absorb the change. Parcel operators have supported BIRDS declarations, but HMRC’s proposed model shifts payment responsibility towards sellers and marketplaces. A carrier may still transmit data, but it is unlikely to accept open-ended liability for a seller’s classification, valuation or quarterly duty position without explicit fees and indemnities.
Do not ignore excluded goods. Products above £135, excise goods, licensed products, trade defence goods and goods needing preference or special procedures need separate handling. If your platform cannot identify those products before checkout, your logistics process will fail later and the parcel may be delayed or returned.
Frequently Asked Questions
Is the £135 customs duty relief already abolished?
No. HMRC and HM Treasury’s July 2026 policy paper says the measure will come into force on a date appointed by Treasury regulations, by October 2028 at the latest. Until commencement, the current rules continue to apply. Businesses should prepare now because systems, contracts and fiscal representation arrangements will take time to change.
Who will need a fiscal representative?
The consultation says overseas sellers and online marketplaces without a physical UK presence may be required to appoint a UK-based fiscal representative. UK-based businesses with a permanent UK address and/or Companies House incorporation would not need one on that UK-presence basis. The final legal test should be checked against the legislation once published.
What does joint and several liability mean here?
It means the fiscal representative can be liable alongside the overseas seller for customs debts linked to the low value import declarations. HMRC may be able to pursue the representative if the seller does not pay. That is why the representative will ask for strong data controls, indemnities and evidence that duty calculations are reliable.
Does this change import VAT rules?
The main reform is about customs duty relief, not the 2021 VAT model. GOV.UK consultation material says VAT is already due on imports of all values, with the seller or facilitating marketplace accounting for VAT in relevant low value business-to-consumer sales. Sellers should still reconcile VAT and duty together because the same order data often feeds both.
Can all goods under £135 use the new low value system?
No. HMRC’s consultation launch transcript listed exclusions including goods above £135, non-ad valorem tariffs, licences or certificates, excise goods, trade defence measures, preference, relief and special procedures. Those products need standard import routing or a different compliance process. Sellers should identify them by SKU before orders are accepted. *** End Patch