De Minimis level and rate of GST (FOI)

Request

When GST was first introduced, it was linked to the De Minimis amount; 3% GST equated a £400 lower limit and then 5% GST equalled a £240 lower limit.

Therefore, will reducing the De Minimis amount to £60 equal a GST rise to around 7.25%?

If not, how and when were GST and De Minimis levels separated from each other?

Response

The Government has no plans to increase the rate of GST.

The GST De Minimis level is linked to the GST rate only to the extent that the De Minimis Level is a value-for-money device to ensure the cost-effective collection of GST at the margin, on lower-value importations.

The current level is set at £135 which represents £6.75 GST. When the current level was set in October 2020, the Government estimated that the return-on-additional-investment ratio would be at least 5:1. That is to say that, for every £1 spent by Customs in the administration of the collection of GST, £5 of GST would be collected. (The overall return on investment is, of course, considerably greater because most GST is collected by registered businesses direct at the point of sale.)

The Government estimates that a ratio of at least 5:1 will continue to be achieved if the GST De Minimis Level is reduced to £60 in 2023, provided that the larger offshore retailers are then accounting for GST at the point of sale, as outlined in the proposed Government Plan 2022-25.