On 23 June 2026 the Treasury announced three things in one package. It is bringing forward the end of customs duty relief on cheap imports. It is reviewing how VAT is collected from businesses trading through online marketplaces. And it is putting the money raised into the business rates bill for pubs, restaurants, hotels and other high street premises. Dan Tomlinson, Exchequer Secretary to the Treasury, framed it as levelling the field between the shop on the corner and the parcel from overseas. A fourth measure in the same announcement gives VAT relief on land used to deliver social homes, which matters if you build but not if you sell.
Two of those change numbers that are already on your own accounts. Here is exactly what each one does, and what it is worth.
The £135 relief: what it actually is
Goods arriving in the UK in a consignment worth £135 or less come in free of customs duty today. That relief was already on its way out — it was announced at Budget 2025 with an outside date of March 2029. The June announcement pulls that forward by six months, to October 2028 at the latest.
Be clear about what the relief covers, because this is where most of the confusion sits. It is a customs duty relief only. VAT has been charged on these parcels since January 2021. Where goods worth £135 or less are outside the UK at the point of sale and sold to a UK consumer, the seller charges and accounts for UK supply VAT at 20% on the sale, instead of import VAT being collected at the border. Sell to a UK VAT-registered business that gives you its registration number and you leave the VAT off and note "reverse charge: customer to account for VAT to HMRC" on the invoice. Above £135, normal import VAT and duty apply at the border in the usual way.
So the cheap parcel already carries VAT. What it does not carry is duty — and duty is not small on the categories that dominate direct-to-consumer imports. Clothing and textile lines commonly sit at 12% under the UK Global Tariff. That is the gap being closed.
The replacement is more than "duty now applies". The reform creates a dedicated low value imports regime, with customs declarations closer to those used for freight, and a fiscal representative concept: a UK-based business that takes on joint liability for the customs debts of an overseas seller. If you run fulfilment, move parcels or act as a customs intermediary, that last point is the one to read twice — it moves someone else's unpaid duty onto your balance sheet.
Putting real numbers on it
An illustrative example, using a £12 phone case sold to a UK consumer.
- Overseas seller, sold through a marketplace, today. Sale price £12.00 including VAT. The marketplace accounts for £2.00 of VAT. Customs duty: nil, because the consignment is under £135. The seller nets £10.00.
- UK shop selling the same item, today. Sale price £12.00 including VAT, output VAT £2.00, nets £10.00 — but it bought its stock in bulk. A bulk consignment is almost always worth more than £135, so the relief never applied to it: it paid duty and import VAT when the pallet landed, and it pays business rates on the premises. Same £10, two extra costs.
- Overseas seller, same item, after the relief goes. Duty is charged on the customs value, not the retail price. On a £10 customs value at a 12% clothing-and-textiles rate, that is £1.20. The seller nets £8.80 instead of £10.00, or holds its margin by raising the shelf price to about £13.44 including VAT.
A 12% swing in landed cost is the difference between a viable price point and a dead one for a lot of low-ticket lines. Duty rates run by commodity code, so the number for your own products may be higher or lower than 12% — look yours up on the UK Trade Tariff before you model anything.
Where the money goes: the 2026-27 rates multipliers
The stated purpose of the revenue is the business rates bill for retail, hospitality and leisure. From 1 April 2026 those properties have permanently lower multipliers, set 5p below their national equivalents:
- Rateable value below £51,000: 38.2p for retail, hospitality and leisure, against 43.2p for everything else.
- Rateable value £51,000 to £499,999: 43.0p for retail, hospitality and leisure, against 48.0p for everything else.
- Rateable value £500,000 and above: 50.8p, whatever the property is used for.
Two illustrative bills. A café with a rateable value of £42,000 pays 42,000 × 38.2p = £16,044, where the ordinary small business multiplier would have charged 42,000 × 43.2p = £18,144. That is £2,100 a year. A restaurant with a rateable value of £120,000 pays 120,000 × 43.0p = £51,600 against 120,000 × 48.0p = £57,600 — £6,000 a year. Those are gross figures before any relief or transitional adjustment on your own bill, but the multiplier gap is the part that is now permanent rather than renewed at each Budget.
If you trade from premises that plausibly count as retail, hospitality or leisure, the job this month is to confirm the billing authority has actually applied the RHL multiplier to your account. It keys off how the property is used, not off its rateable value, and a misclassified property pays the higher number silently for a full year.
The marketplace VAT review, and what it means for you
The second strand is a review of how VAT is collected from businesses selling through online marketplaces, with the government seeking views on extending the existing marketplace rules. Nothing has changed yet. The direction of travel has: more of the VAT liability on marketplace sales is being pushed onto the platform, which in practice means the platform will police the seller.
That is a compliance problem before it is a tax problem. Platforms enforce by suspending accounts, and they act on the data they hold about you rather than on the explanation you would have given. If your VAT status on a marketplace does not match your VAT status at HMRC, that mismatch is now a live risk to your listings.
Five things worth doing this week
- Check where your goods physically are at the point of sale. Not where you are — where the stock is. That single fact determines who accounts for the VAT on a low-value sale.
- Confirm, in writing, who is accounting for VAT on each marketplace you use. Then reconcile the platform's VAT report to your own return for one quarter. A gap here is the most common cause of an assessment.
- Look up the commodity code for your top five products and write the duty rate next to each one in your pricing sheet. You have until October 2028; you want the number now.
- Run the rolling VAT test if you are near the threshold. See below.
- Check the multiplier on your rates bill if you hold retail, hospitality or leisure premises.
The rolling 12-month VAT test, done properly
The VAT registration threshold is £90,000 of taxable turnover and the deregistration threshold is £88,000. Both have been unchanged since 1 April 2024 and are held at that level until at least April 2027.
The test is not your accounting year. Add up taxable turnover for the 12 months ending on the last day of each month, and keep doing it monthly. If the total for the 12 months to 31 August 2026 comes to £92,300, you crossed the threshold in August. You must tell HMRC by 30 September — 30 days after the end of the month you went over — and you are registered from 1 October, the first day of the second month after you went over. There is a separate forward-looking test: if you expect taxable turnover in the next 30 days alone to exceed £90,000, you register immediately and are registered from the day you formed that expectation.
If the breach was a genuine one-off and you expect turnover to stay under £88,000 over the following 12 months, you can apply to HMRC for an exception, but you have to apply at the time and show your working. It is not something you can argue retrospectively when the assessment arrives.
The short version
If you sell online, your VAT position is about to be looked at by more people, more often, with better data. If you sell from premises, the rates multiplier gap is now permanent and worth checking. If you import low-value goods, you have until October 2028 to reprice, and knowing your commodity codes is the first step.
This is squarely where small business accounting support earns its keep — not just filing the return, but making sure the treatment underneath it is right in the first place. If you are near the threshold, our post on when you should register for VAT walks through the decision, and VAT for online sellers covers the marketplace mechanics in more detail. If you would rather have this reviewed once rather than worried about monthly, that is what our Tax Planning service is built for.