Ministers urged to reinstate tax-free shopping to deliver Brexit boost
Ministers have been urged to reinstate tax-free purchases for international visitors to make the UK a ‘global shopping capital’ and help the country benefit from its position outside the EU.
“With Britain no longer in the EU, we have the opportunity to become the best place in the world for shopping,” Derrick Hardman, chair of Association of International Retail (AIR), said.
Hardman said that while the EU offers tax-free shopping to international residents, Britain’s position outside the bloc allows it to offer the perk to all 450m EU residents.
The scheme would offer a £3.7bn annual benefit and deliver at least 73,000 new jobs, according to new research.
“This would give Britain an unchallengeable competitive advantage within Europe.
“In addition to levelling the playing field with our EU competitor destinations who all offer VAT refunds to non-EU visitors, Britain would have the unique opportunity to create a whole new, shopping-led, EU tourism market,” Hardman said.
Under the tax-free shopping scheme, which then-chancellor Rishi Sunak scrapped at the beginning of 2021, visitors could reclaim the VAT paid on their purchase at 20 per cent of the price.
Retail businesses and a host of airports have since pleaded for the government to reinstate the tax break, with wealthy international shoppers choosing to splash their cash elsewhere.
Last year, footfall in the West End rose above pre-pandemic levels, while spending remained 12 per cent below 2019, which pundits attributed to the loss of the VAT perk.
Chief executive of the New West End Company, Dee Corsie, has said that reinstating tax-free shopping in London is a “golden opportunity” to return the country to growth.
Loss of perk a ‘huge own goal’
The end of tax-free shopping has been bemoaned by retailers from Paul Smith to Chapel Down, as well as Claridge’s, John Lewis and Heathrow.
“Customers at our hotels… used to come laden with parcels. Now they spend less time with us and go on to shop in Paris or Milan,” Sir Rocco Forte, chairman of Rocco Forte Hotels, said.
“This is a huge own goal,” he added.
Michael Wainwright, chairman of Boodles, the Liverpool-established luxury jewellery brand with a history dating back to 1798, said: ‘Every one of the UK’s EU rivals offers tax-free shopping for international visitors, while we now don’t, so increasingly they are going elsewhere.
“At its best, Britain is an open, trading economy that encourages visitors and investment from the rest of the world. The decision of the last government to scrap tax-free shopping… makes no sense.”
While retailers have been campaigning against the loss of the tax perk for years, the government has so far resisted any moves to change.