UK. The UK’s opposition Conservative Party has pledged to restore tax-free shopping for overseas visitors if it returns to government – but the proposal excludes the return of tax-free shopping at UK airports, The Moodie Davitt Report can confirm.
The minority Conservative Party, which currently holds just 118 seats compared to the Labour Government’s 403, confirmed to us that its proposal is specifically to restore VAT refunds for eligible visitors from outside the European Union, reversing the abolition of the VAT Retail Export Scheme in 2021.
It does not extend to restoring wider tax-free airport sales.
The party said the VAT refund scheme could subsequently be extended to EU visitors by the end of the next Parliament if evidence shows that it pays its way.
The distinction is significant for the travel retail sector. The changes introduced in January 2021 not only removed the VAT Retail Export Scheme in Great Britain but also ended tax-free airport sales across categories including beauty, fashion, luxury goods and consumer technology, while duty-free sales of liquor & tobacco continued.
Announcing the new policy, Conservative Party leader Kemi Badenoch said: “Britain should be the place where the whole world comes to shop. We have iconic retailers, inventive designers and brilliant manufacturers, but they are being let down by a tax policy that is chasing their customers away.”
The Conservatives cited research from Cebr suggesting full restoration of tax-free shopping for overseas travellers could attract up to 2.35 million additional visitors and generate £4.1 billion (US$5.48 billion) in incremental spending.
The research estimates that every £1 of VAT refunded could generate £1.56 in other tax revenues.
The proposal has won backing from high-profile retail, hospitality and tourism figures, including British Retail Consortium CEO Helen Dickinson, British Fashion Council CEO Laura Weir, UKHospitality CEO Kate Nicholls and Watches of Switzerland Group CEO Brian Duffy.
The announcement puts the long-running issue of tourist tax-free shopping back on the UK political agenda but leaves unresolved a separate issue of major importance to the country’s travel retail sector: the restoration of airport tax-free shopping.
London Heathrow Airport, which has been a prominent campaigner for reform of the UK’s tax-free shopping rules, declined to comment when contacted by The Moodie Davitt Report. ✈
