UK. The decision to remove VAT-free shopping for overseas visitors could be reviewed, according to UK Chancellor Jeremy Hunt, speaking after his Autumn Statement (budget) last week.
The tax-free scheme, which entitles foreign visitors to a VAT refund for goods purchased from the high street and airports or other departure points in the UK, was discontinued by the UK government in 2021 under post-Brexit rules. This affected the sales of goods across various categories including fragrances, cosmetics, fashion, luxury and consumer technology.
A coalition of aviation, tourism and travel retail industry players has been lobbying for the return of tax-free sales for tourists; the UK government’s previous budget in March excluded a provision to reinstate this scheme.
Following the Autumn Statement, fellow Conservative MP Sir Geoffrey Clifton-Brown quizzed Chancellor Hunt in Parliament about the tourist tax.
Chancellor Hunt replied: “We want to do everything possible to make our tourism and retail industry competitive. We want to encourage international visitors. We changed policy on this issue a year ago because it cost around £2.5 billion a year and we did not think we could afford to continue it, but we are looking again at the numbers in the light of the most recent data and we can see what has happened to comparative shops in Paris and Milan. We will review this to see if it is still that expensive, and I hope that it is not.”
Commenting on LinkedIn, Heathrow Airport Retail Director Fraser Brown called for a review and reintroduction of the VAT-free scheme by the next budget.
He said: “It is welcome news that the Chancellor Jeremy Hunt is looking again at the numbers in light of new data which clearly shows that the UK is losing out to the likes of Paris and Milan, without a proper tax-free shopping incentive in place.
“The UK’s international competitiveness is on the line as tourist spend in the UK continues to be eclipsed by our European neighbours, where goods are up to 20% cheaper. However, today marked yet another missed opportunity to stop this export of sales abroad, and to level the playing field for British businesses. There can be no more delay, the Chancellor must act by the Spring Budget and remove this tourist tax.”
Reacting on behalf of the UK Travel Retail Forum, Chair Nigel Keal said: “The Chancellor has promised to ‘get Britain growin’” in his Autumn Statement. The UK Travel Retail Forum believes that the return of tax-free shopping for international travellers, and the introduction of arrivals duty free stores at airports, ports and international rail stations, will do just that.
“Both arrivals duty free and VAT free shopping will provide a welcome boost to the travel and travel retail sector, at the same time making the UK a more attractive destination to international visitors.
“UKTRF is working hard to make the case for both policies to ministers. We note the Government’s commitment in the Autumn Statement to accepting representations on tax-free shopping and look forward to continuing our positive dialogue with Treasury on both issues.”
In a recent guest article that featured in The Moodie Davitt Report, London Gatwick Airport Retail Director Rachel Bulford said that London Gatwick alone has seen a -8% decline in spend within its fashion retail outlets since tax-free shopping was removed, and a -3% decline in overall spend across the airport’s retailers.
She also quoted figures saying that a reintroduction of tax-free shopping would attract more than 1.6 million extra visitors to the UK in 2025/26 and stimulate an extra £2.8 billion of tourist spending. ✈
