Marks & Spencer, Primark and Next have written to the Department for Business and Trade urging the closure of a customs exemption that lets parcels under £2.60 avoid duties. The loophole, introduced for low‑value goods, now benefits Chinese sellers who ship cheap items to UK consumers, undercutting domestic price points. Retailers argue the rule distorts competition and erodes margins. They claim it adds costs for couriers.

The exemption was originally designed to simplify customs for parcels valued at £2.60 or less, assuming minimal revenue loss. However, e‑commerce platforms have turned it into a cost‑saving channel, allowing overseas firms to price goods below UK retail levels without paying import VAT. Industry analysts estimate the gap could shave several percentage points off profit margins for brick‑and‑mortar chains.

If ministers act, the change would force all low‑value imports to incur the standard 20 % VAT, narrowing the price advantage Chinese competitors enjoy. That could level the playing field for UK retailers, preserving market share and supporting employment in the sector. The government has yet to set a timetable for any amendment without delay to the supply chain.