Reinstate VAT-free tourist shopping, businesses tell government

VAT-free shopping for tourists came to an end in 2021

A growing number of London businesses are calling on the government to reinstate VAT-free tourist shopping.

Shops, brands and Heathrow airport say London is losing tourists to Paris, Milan and other European cities where they do not have to pay tax on items.

Before 2021, visitors to the UK did not have to pay VAT when shopping here.

Ross Baker, Heathrow's chief commercial officer, said: "Tourist spend in the UK is eclipsed by our European neighbours where goods are up to 20% cheaper."

He is joined by more than 300 brands in signing a letter to the chancellor saying the UK is "losing out" and that the impact is already being felt with some brands closing stores.

They claim tourists from America, China and the Gulf states are opting to travel and shop elsewhere in Europe where they can claim VAT back from purchases.

The issue is being debated in Parliament on Thursday but the government insists that changing the rule back would not "benefit Brits".

A treasury spokesperson said: "The scheme could cost British taxpayers around £2bn a year, which is money we would need to find elsewhere to help fund."

But Liberal Democrat treasury spokesperson, Sarah Olney, the MP for Richmond Park, said it was, "deterring thousands of visitors every year who could be spending their money in our shops and restaurants, boosting our local economies and adding to the exchequer's tax revenue.

"The country's high streets have dealt with one hammer blow after another, from Covid-19 to the sky-rocketing energy bills - reversing this misguided tourist tax would offer them some much needed help."

The Labour Mayor of London Sadiq Khan has previously said that reinstating the perk would provide a "much-needed boost" to the capital's retail sector.

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