What Does the De Minimis Rule Mean for UK Retailers?

• The de minimis rule is a threshold that exempts low value imported goods from customs duties, allowing foreign retailers to ship products around the world without paying import fees.  
• In the UK, the de minimis rule applies to parcels valued at £135 or less which enter the country. This simplifies import procedures while enabling faster delivery for small shipments. 

• For retailers looking to compete with foreign retailers importing goods to the UK at discounted prices, they should focus on UK distribution, improve customer loyalty schemes or prioritise online visibility and promotion.  

The Autumn Budget announcement from Chancellor Rachel Reeves at the end of November 2025 contained numerous announcements which caused apprehension across the UK retail space.  

While rises to the national living wage and a cautious approach to GDP growth grabbed the headlines, many UK retailers were focused on one certain announcement. As part of the Budget, it was announced that the de minimis rule would remain in place in the UK until March 2029.  

But what is the de minimis rule? And why are retailers across the country concerned about its continued implementation? Join us as we explore what the de minimis rule might mean for your business.  

What is the De Minimis Rule? 

The de minimis rule is often attributed to any small, trivial element of a system of law which is often disregarded; de minimis is Latin, translates in English to ‘about minimal things’. One of the main contexts where you may see this rule applied is to tax, with certain small charges or transactions exempt from taxation or fees. 

This means the de minimis rule often applies to shipped goods below a certain, negligible value being excluded from duties or VAT. The de minimis rule simplifies the importing of smaller parcels, reducing administrative costs and speeding up processing of parcels at borders. However, for many retailers in the UK, the de minimis rule continues to cause more problems than it seemingly solves.  

How Does the De Minimis Rule Work in the UK?

In the UK, the de minimis rule means that parcels imported into the country with a value of £135 or less are exempt from customs duties. VAT will still need to be paid on these goods however, parcels from foreign businesses have been able to enter the UK without undergoing full customs charges or procedures. 

While the de minimis rule was introduced to simplify the process of importing goods, it has led to an influx of overseas distributors importing large volumes of low-cost goods duty-free. Sky News reported that the value of de minimis shipments to the UK rose from £3.9bn to £5.9bn between 2024 and 2025, a 53% increase. With the cost-of-living crisis still very much placing pressure on the pockets of the British population, consumers will continue to choose more affordable options. 

This has made it difficult for UK retailers to keep up as large global retailers such as Shein, Temu, or TikTok Shop offer mass manufactured products with sizable profit margins at minuscule prices, helped in no part by the lack of duty paid by these ecommerce giants when their products enter the UK.  

When was the De Minimis Rule Passed?

The de minimis rule has existed in various forms as part of EU customs laws since the 1980s. The UK passed their own de minimis rule in January 2021 upon the country’s exit from the EU, with the new scheme very similar to the Low Value Consignment Relief (LVCR) adopted while part of the European Union.  

When will the De Minimis Rule End?

Currently, the UK plans on keeping the de minimis rule for import customs until March 2029. This timeframe has been given to avoid any disruptions to supply lines and to give businesses time to prepare for increased costs. 

This proposed end to the de minimis rule in the UK is in line with the steps taken by other major economies in recent years. The EU is set to introduce a flat €3 customs fee for parcels €150 or less in 2026 before completely scrapping the de minimis rule by around 2028. On the other hand, the US removed their $800 de minimis threshold as part of the introduction of sweeping tariffs on foreign goods in 2025.  

Despite a deadline set for the end of the de minimis rule, some UK businesses believe that more immediate action must be taken to combat the unfair advantage that overseas merchants have over domestic vendors. Some of the UK’s largest retailers have called for the government to go ‘further and faster’ when it comes to scrapping the rule however, there is a reluctance to speed up this process due to fears around rising inflation against the backdrop of a struggling economy.  

What Does the De Minimis Rule Mean for the Future of UK Businesses?

The de minimis rule means that overseas retailers continue to sell their products for cheaper than any domestic retailer could keep up with. The money which these retailers are saving means that they’ve been able to reinvest and fight UK retailers on the only front where they hold an advantage: delivery. 

International ecommerce giants are now investing in transporting these packages by air, with large amounts of cheap cargo from across the world arriving at UK airports every day. That means that your new skirt from Shein or trinket from Temu can be transported from China to the UK in a matter of days, from a foreign warehouse to your front door at a speed previously thought impossible for non-premium goods. 

How Can UK Retailers Compete with Overseas Retailers?

For retailers, the continued implementation of the de minimis rule may give overseas retailers an advantage in terms of pricing. This means that brands will be looking for any way that they can gain a leg up on cheaper competitors from across the globe. 

For British retailers, this may involve prioritising UK supply, manufacturing and distribution to avoid any customs charges when importing or exporting goods –  especially when overseas competitors will likely not be incurring the same costs. Offering loyalty programs, consumer-friendly return policies and better customer service may also help to sway shoppers away as more shoppers start to value relationships with their retailers beyond a single transaction. 

Another way that UK retailers can fight back against the seemingly unfair advantage for overseas retailers brought about by the de minimis rule, is by increasing their visibility online to attract more customers towards their products. It’s never been simpler to get more from your paid campaigns, as using a Comparative Shopping Service (CSS) allows you to save up to 20% on your ads spend while helping to boost conversions.

It’s also worth noting that European retailers face slightly different rules. While the UK de minimis threshold is £135, EU countries are moving towards a €150 threshold with a flat customs fee starting 2026 and will fully remove the exemption by around 2028. Retailers catering to European markets must therefore plan their pricing, logistics, and marketing strategies differently compared to the UK, ensuring compliance while remaining competitive in each region. 

At Productcaster, we’re constantly working to help retailers improve their shopping campaign performance, and as a Google Premium CSS Partner, we’re also delivering award-winning services which help businesses stand out from the competition and reach new heights. 

Interested in finding out more? You can book a demo today or speak to one of our experts and discover what Productcaster can do for you.