High street businesses across the UK are set to benefit from accelerated government action designed to level the playing field against online competitors and tackle tax avoidance. The Treasury announced on 23 June 2026 that it is bringing forward reforms to customs duties on low-value imports and launching a review into how online sellers pay VAT, with new revenue earmarked for improvements to the business rates system.
A key change involves the scrapping of customs duty relief for low-value imports (LVIs), specifically goods valued at £135 or less. Originally announced in Budget 2025 by the Chancellor, the implementation of this policy will now be brought forward by six months to October 2028. This move means that all goods imported into the UK, regardless of their value, will be subject to customs import duties, a measure intended to ensure fairer competition between physical high street shops and online retailers who have often benefited from the previous relief.
In parallel, ministers are initiating a review into the collection of Value Added Tax (VAT) from businesses operating through online marketplaces. This comes amid concerns that some online-only sellers may be circumventing their tax obligations, thereby undercutting high street businesses that diligently pay their taxes. The government is seeking input on how existing online marketplace rules can be expanded to ensure all businesses comply with UK VAT regulations. Any additional revenue generated from these stricter collection methods will be reinvested into improving the business rates system for vital high street establishments, including pubs, restaurants, and hotels.
Exchequer Secretary to the Treasury, Dan Tomlinson, emphasised that these actions are targeting "unfair competition and dodgy businesses" that are detrimental to high streets. He highlighted that ensuring tax is paid when owed will provide revenue to enhance the business rates system, directly supporting local enterprises. The package of reforms also includes a consultation on changes to VAT on land for new social housing, with the aim of streamlining and accelerating the delivery of affordable homes by ensuring the tax system better reflects modern social housing development models.
These combined measures represent a significant step towards creating a tax and customs system that is simpler, more customer-focused, and fosters fairer competition across the economy. The reforms are part of a broader government agenda to support economic growth, reduce administrative burdens on legitimate businesses, and strengthen fairness in the marketplace, reflecting an evolving retail landscape where online and physical stores increasingly interact.