UK. The UK government’s latest Budget, announced on Wednesday, did not include a provision to reinstate tax free shopping for overseas visitors, despite urgings from aviation, tourism and travel retail industry stakeholders.
As reported, until the end of 2020, international visitors could receive a VAT refund on items bought in High Street shops, with VAT-free pricing on purchases made at airports.
But under post-Brexit rules drawn up by government, tax free sales at UK airports were withdrawn for all outbound passengers from 1 January 2021 on goods other than liquor & tobacco. That included the all-important fragrances & cosmetics category, as well as fashion, luxury, and consumer technology.
Leaders at key London retailers including Heathrow Airport, Selfridges and Harrods have regularly spoken out on what they believe to be the unfairness of the move by the UK Government to remove tax free perks in the country. They say it gives an unfair advantage to rival overseas shopping destinations.
Reacting today, Heathrow Airport said: “This was a budget for growth and unshackling business investment, delivering on the Prime Minister’s priority of growing the economy, but the Chancellor missed a trick.
“A new tax free shopping incentive for international visitors would attract millions more visitors, stimulate billions more in tourism spend, and would create the perfect environment for retailers to commit to the UK and invest substantially on high streets and at airports across the country, just as they have continued to do in other European countries where they still have tax-free shopping in place.”
The airport company added: “France is one of those countries and tourism spend there has already surpassed 2019 levels to a record €58 billion, eclipsing spend in the UK which stood at £26 billion, well short of pre-pandemic levels. The Treasury has the opportunity to introduce a brand new, fully digital tax free shopping incentive, one that works for consumers, the economy and the Exchequer, and one that truly cements the UK’s international competitiveness.”
The decision not to review the removal of tax free shopping was also criticised by other industry players.
Representing luxury travel retail specialist 2.0 & Partners, Senior Executive VP Marco Passoni said: “It is a shocking decision by the UK Government to not use yesterday’s budget to bring back tax free shopping. Many of us warned of the serious impact this foolish decision would have before it was first taken – and those warnings have come true. High-spending shoppers will continue to choose to buy in markets such as Italy, France and Spain, where the conditions are more favourable. For the UK Government to not see this, or to ignore it, is madness.
“We as an industry, both luxury retail and travel retail, must continue to call for an end to this stupidity and a return of tax free shopping, which will make the UK once more competitive for consumers and attractive for brands.”
Approached on the matter, the UK Travel Retail Forum did not comment directly on the tax free shopping issue but focused on the work UKTRF is doing to engage the government on duty free arrivals.
UKTRF Chair Nigel Keal said: “UKTRF continues to make the case that arrivals duty free will deliver substantial benefits for UK businesses, airports and passengers. Arrivals duty free will be a Brexit benefit for airports of all sizes, but especially those smaller, regional airports up and down the country. We continue to encourage the Government to consider this policy concept, and are ready to offer our ideas, expertise and support.” 
