BUDGET 2025: Ending of ‘de minimis’ rule set to increase warehouse take up

By Liza Helps, Property Editor, Logistics Matters

ACCORDING TO Knight Frank’s head of UK and European Logistics Insight, Claire Williams the decision has ‘created a strategic window of opportunity for the logistics sector’.

“The demise of the de minimis threshold won’t just raise revenues; it will reroute supply chains through Britain’s warehouses and act as a catalyst for expansion of onshore fulfilment and logistics networks.

“With sub-£135 imports having surged 53% last year to nearly £6 billion, the fiscal case is clear, and logistics operators now have clarity, and crucially, time to prepare. The government expects to raise around £500 million a year once the rule is phased out, a more realistic projection than earlier estimates, which failed to factor in anticipated shifts in behaviour.

“Yet it is precisely these behavioural shifts that will offer a meaningful boost to the industrial and logistics market, as supply chains move away from fragmented small-parcel inflows toward consolidated container or airfreight shipments with more fulfilment, processing and distribution from within the UK. This will stimulate demand for domestic logistics space, generate jobs, and give operators confidence to invest in new facilities, automation and inventory strategies.”

Supply chain and logistics consultancy SCALA’s executive director Chris Clowes added: “Phasing out the de minimis threshold marks an important step towards fairer competition for UK retailers and stronger accountability and product safety for consumers.

“While some ultra-low-cost imports – including those from major ecommerce platforms like Shein and Temu – may become more costly once the change eventually comes into force, the long-term outcome should be a more level playing field for compliant businesses across the UK.

“The reform is also likely to shift more stockholding and fulfilment activity into the UK, increasing demand for domestic warehousing and reducing reliance on direct-to-consumer air freight. This would enhance resilience within supply chains and support wider sustainability goals.

“However, with implementation not due until 2029, responsible UK retailers and logistics providers will continue to operate in an uneven marketplace in the meantime. A phased programme introduced sooner would give businesses greater certainty, encourage investment in UK-based distribution models, and limit avoidance behaviours. Earlier action would provide clarity for the market and reinforce consumer protection.”

Originally de minimis exemptions were meant to help small businesses and sole traders not eCommerce conglomerates, but the loop hole has allowed the likes of SHEIN and TEMU to boom. In the year to April 2025 the HMRC put the trade value of de minimis imports to the UK at £5.9 billion – up 53% on the previous year with no signs of slowing down.

US president Donald Trump ended the de minimis exemption for goods from China in May while the EU plans to remove its €150 threshold by 2028.