Shein's £2.58bn UK year tests Britain's 2028 date for ending duty-free parcels

Shein's British accounts describe a sales and marketing operation. Most of the 113 staff work in those two functions ^[4], and the company said most of them provide "marketing expertise for the UK market" ^[5]. The clothes come from Chinese factories and are shipped to homes in orders kept low enough in value to avoid import duties ^[6]. On those figures, each UK employee accounts for about £22.8m of revenue ^[21]. The UK entity's pre-tax profit of £45.2m ^[3] is a margin of about 1.75% ^[22].

The rule that makes those orders duty-free lets overseas sellers send goods valued at £135 or less direct to British shoppers without paying customs duty ^[7]. Rachel Reeves, identified by the Guardian as the former chancellor, said she would get rid of it by 2028 ^[8]. City AM reports the change will take effect in October 2028 ^[9]. Major retail bosses have said the government should move sooner ^[19].

Of the US, the EU and Britain, Britain is the only one where the exemption still stands ^[20]. The US revoked its exception for Chinese-made goods last year, ending relief on parcels under $800 sent to individuals and crimping Shein's expansion there ^[16]. The EU began in July to replace its €150 relief with a flat €3 customs duty ^[17]. Retailers have warned that closing the loophole in those two markets could prompt Shein and Temu to shift effort to the UK in the short term, City AM reported ^[23].

A skeptic would say the 26% growth ^[2] came from marketing. Shein credited a partnership with the Wireless and Creamfields festivals, a pop-up shop on Oxford Street and Christmas gift events in London, Edinburgh, Manchester and Liverpool ^[10]. Operating expenses, covering administration and distribution, more than doubled to £27m ^[18]. The two explanations fit together. Promotion brings in the customer, and the order that customer places is still built to sit under the duty threshold ^[6]. The reports do not split the growth between price and promotion.

The Guardian judged that the figures are likely to increase pressure on the government to bring the change forward ^[24]. The published date is still October 2028 ^[9]. Investors have already marked Shein down for regulatory risk: concern about government rule changes left its listing value far below earlier expectations, at just over $26bn against $100bn in a 2022 funding round ^[14]. The group has a cost problem of its own as well. It reported a 67% fall in quarterly profit to £173m ^[11], which Xu Yangtian, its founder and chairman, said was "primarily driven by a sharp spike in oil prices and freight rates amid Middle East geopolitical tensions" ^[12]. He warned that the trading environment will "remain uncertain in the second half of 2026" ^[13].

For a British retailer setting prices this quarter, the trade-off is between matching a rival whose low-value parcels enter duty-free until October 2028 and protecting margin on the chance the date moves earlier. I think 2028 is the date to plan on, because it is the only one the government has set ^[9]. Matching now commits margin until the duty arrives. Waiting cedes share in the period when retailers expect Shein and Temu to push harder into Britain ^[23]. Freight is the second cost in Shein's price, and its chairman named it as the main cause of the profit fall ^[12].