From de minimis to data, how the UK and EU are reshaping low value parcel rules

Low value parcels have long benefited from simplified customs treatment in both the UK and the EU. These thresholds, designed to speed up clearance and reduce administrative burdens, were suited to a world of modest parcel flows. Today that world has changed. Explosive growth from fast-fashion and marketplace giants, especially Shein and Temu, has pushed parcel volumes to unprecedented levels and exposed gaps in valuation, compliance and fair competition.

As a result, both the UK and the EU are preparing major reforms. While their timelines differ, the direction is the same, shifting away from blanket duty exemptions and towards data-driven oversight and greater platform responsibility. This will reshape how e-commerce sellers, marketplaces and carriers manage customs, data submission and liability.

The UK’s direction of travel, ending the £135 relief and moving to item level data

The UK has confirmed that its current customs duty relief for low value imports (LVIs), covering consignments valued at £135 or below, will be abolished by March 2029 at the latest. This commitment was announced alongside the Autumn Budget 2025 and is now subject to a detailed HMRC consultation on how the replacement system should work.

The policy response is driven by exceptional growth. HMRC data shows that LVI parcels using the BIRDS reduced dataset more than tripled between 2021 and mid-2024, reaching around 600 million consignments a year, or roughly 1.6 million parcels per day. Retailers argue this has created an uneven playing field, as overseas sellers benefit from duty-free imports while domestic businesses do not.

Under the proposals, the existing Bulk Import Reduced Data Set (BIRDS) would be retired and replaced with a new LVI customs mechanism. This new approach would require item level data for each good in a parcel. HMRC’s consultation suggests a split-data model where:

• sellers or marketplaces provide product-specific details such as descriptions, values, quantities and origin

• parcel operators provide transport and routing information

The model would allow HMRC to run improved risk and compliance checks before parcels are cleared. One option being explored is linking LVI reference numbers with existing systems such as GVMS or airport inventory systems to support release decisions.

A significant shift concerns liability. The government proposes that sellers or online marketplaces using the new arrangements would be responsible for paying customs duties on LVIs, likely on a quarterly basis after goods enter the UK. For non-UK sellers and platforms, the government is minded to require a UK-based fiscal representative with joint and several liability. HMRC is also exploring VAT alignment, so VAT and customs duties can operate more coherently at the point of sale.

The reforms are expected to raise around £500 million per year once operational. Many UK retailers have urged government to accelerate the timetable, arguing that continued delay prolongs competitive distortions.

The EU’s fast-moving reforms, ending the €150 duty exemption and launching the EU Customs Data Hub

The EU is further ahead in its legislative process and is moving more quickly. Since July 2021, the EU has required a customs declaration for all commercial imports and has collected VAT from the first euro, with the Import One-Stop Shop (IOSS) allowing VAT on consignments not exceeding €150 to be collected at the point of sale.

In 2024 and 2025, EU finance ministers reached political agreement on a major overhaul of the customs system. A key element is the abolition of the €150 customs duty exemption for low value parcels. The agreed plan provides:

• Early 2026, introduction of a simplified, temporary duty calculation regime for parcels below €150 to address widespread undervaluation and fraud while IT systems are being expanded

• Around 2028, full removal of the €150 exemption when the EU Customs Data Hub becomes operational

The EU Customs Data Hub is a centralised EU-level platform that will collect import data, integrate information from sellers, marketplaces and carriers, and use modern analytics, including AI, for risk assessment and fraud detection. It replaces highly fragmented national systems with a single EU-wide architecture.

A crucial feature of the reform is the role of platforms. Under the new model, e-commerce marketplaces will become deemed importers for the goods they facilitate. This means they will be responsible for declaring goods, providing accurate item level data and paying both customs duties and VAT on low value imports. This mirrors the VAT reforms introduced in 2021 and aims to tackle widespread undervaluation, with EU authorities estimating that up to 65 percent of small parcels may be misdeclared today.

For businesses, this means the need for reliable classification tools, accurate valuation processes, and systems capable of feeding clean data into the Data Hub.

Comparing the UK and EU, different timelines, same destination

Although the UK’s timetable runs to 2029 and the EU’s reforms begin in 2026 and mature by 2028, the two systems are converging in key ways. Both reforms:

• remove existing de minimis duty thresholds

• introduce or strengthen item level data requirements

• place greater compliance responsibility on marketplaces and sellers

• increase the role of data-driven risk management

• aim to address undervaluation, misclassification and non-compliance in mass-volume parcel flows

Current flows reflect the older rules. Parcels under €150 shipped to the EU attract VAT but not customs duty until the 2026 transitional regime begins. Parcels under £135 entering the UK attract import VAT but benefit from customs duty relief until the new LVI system is implemented. Both will change once the reforms go live.

What matters most across both jurisdictions is the shift towards accurate, high-quality, item level data provided by sellers and platforms, rather than simplified declarations supplied only by carriers. Automation and integration will be essential to keep pace with this.

Looking ahead

The shift to item level data and platform accountability means businesses will need smarter, automated tools for extracting, validating and submitting customs information. Reliable classification, clean data and integrated workflows will be essential to maintain speed and compliance as parcel rules tighten in both the UK and EU.

As de minimis reliefs are phased out, it may also be worth exploring whether special procedures such as inward processing, customs warehousing or returned goods relief could help optimise duty and VAT, and in some cases provide complete tax relief when conditions are met. For high volume e-commerce and cross-border fulfilment models, these regimes may become increasingly valuable.

Businesses that invest early in automation and assess where special procedures could apply will be better positioned to stay compliant and manage costs as the new rules take effect.