Dear Valued Clients and Partners,
We are writing to formally inform you of a significant policy adjustment recently announced by the UK government, which will have a profound impact on cross-border trade between our two parties. According to the official statement released by the UK Treasury on November 27, 2025, the country will terminate the duty exemption policy for low-value imported goods, with the new regulation scheduled to take effect no later than March 2029 .
To help you fully understand the implications of this policy change, we hereby clarify the core details as follows:
Current Policy Framework: Currently, imported goods into the UK are subject to a three-tier tax system based on their value. Goods valued at £135 or below are exempt from customs duties; among these, items over £15 but not exceeding £135 only need to pay 20% VAT, while those £15 or less are exempt from both duty and VAT .
Key Changes of the New Policy: The upcoming regulation will abolish the duty exemption for goods under £135. This means that all imported goods, regardless of their value, will be required to pay customs duties. Specifically, products that previously only incurred 20% VAT will now be subject to additional customs duties ranging from 5% to 17% depending on the commodity category, resulting in an estimated comprehensive cost increase of 20% to 30% .
Policy Rationale: This adjustment is driven by the UK’s need to address tax revenue losses and create a fair competitive environment. HMRC data shows that the UK lost up to £4.8 billion in tax revenue due to the duty exemption policy in 2024, while the number of low-value imported parcels soared to 1 billion in 2023 . The UK government expects this policy to increase annual fiscal revenue by approximately £500 million and provide fairer conditions for local retailers .
Recognizing the potential impact of this policy on your business planning and cost control, Loongwa has taken proactive measures to mitigate risks:
We have established a dedicated cross-border trade team to conduct in-depth research on duty rates for different product categories and provide customized tax calculation support;
We are exploring localized solutions such as UK warehouse storage to optimize supply chain costs and maintain price competitiveness;
We will regularly update you on the latest implementation progress and detailed rules of the policy as the UK government launches consultation procedures for implementation details .
It is worth noting that this policy aligns with the global trend of tightening cross-border e-commerce tax regulations, following similar moves by the United States (which ended duty exemption for goods under $800 earlier this year) and the EU (planning to abolish exemption for items under €150 in 2026) .
Our team is readily available to discuss any concerns you may have regarding order adjustments, pricing strategies, or supply chain optimization. Please feel free to contact your dedicated account manager or reach out to us via [email protected] at your convenience.
We greatly appreciate your long-term trust and support. Loongwa is committed to working closely with you to navigate this policy transition and ensure the stability and sustainability of our cooperation.
Sincerely,