Regulatory updates - United Kingdom

On November 26, 2025, as part of the UK Budget 2025, the Chancellor confirmed the removal of the £135 customs duty exemption for low-value imports. The change will apply to all commercial consignments currently benefiting from this relief and is expected to be fully implemented by March 2029.

The Government has launched a consultation on the new compliance framework, which includes:

• Item-level data requirements for customs declarations.
• Shifting compliance responsibility to marketplaces and sellers, with potential UK fiscal representative obligations for non-established businesses.
• Integration of customs duty collection with VAT processes to streamline reporting.
• Replacement of the current BIRDS model with a new LVI customs system designed for high-volume, low-value flows.

This reform aligns the UK with international trends, including the EU’s plan to abolish the €150 de minimis threshold and the US tightening of its $800 exemption. The move is intended to protect revenue, reduce undervaluation risks, and create a level playing field for domestic retailers.

The consultation is currently open and will close on March 6, 2026.  

On November 26, 2025, the UK government published Budget 2025, confirming a major step toward digitalising tax administration.

As part of a broader investment in HMRC, the government will require all VAT invoices to be issued electronically from April 1, 2029. A detailed implementation roadmap will be developed in consultation with stakeholders and published at Budget 2026.

E-invoicing is expected to reduce administrative burdens, improve reporting accuracy, accelerate payments, and help close the VAT gap. The UK’s move aligns with the EU’s VAT in the Digital Age (ViDA) initiative, which will require e-invoicing for cross-border transactions from July 2030. 

HMRC has detailed its “digital by default” approach in their transformation roadmap. While the roadmap encompasses making tax and customs systems modernized and fully digital, a focal point also addressed in this context is e-invoicing.

Building on the progress made by the MTD scheme (Making Tax Digital), the UK’s proposed introduction of e-invoicing is part of a broader strategy to address issues associated with non-compliance related to tax matters. HMRC and DBT have collaborated on increasing the adoption of e-invoicing in the private and public sectors.

The responses to the public consultation released by both HMRC and DBT that closed in May 2025 will be used to direct the approach the UK will take regarding widespread adoption of e-invoicing.