In a mayoral letter to the Chancellor, Jeremy Hunt MP, key retail businesses and industry lobby groups called for the return of VAT-free shopping. The letter cites that by re-introducing the shopping scheme,’treasury revenues would be a net positive of £350m each year’

The British Beauty Council has backed a renewed call for the UK government to reinstate VAT-free shopping for international tourists. The letter is from Mayor of London Sadiq Khan and signed by leading beauty retailers including Harrods, Burberry, and Selfridges.

The VAT Retail Export Scheme in the United Kingdom ended on the 31st December 2020 at 11 pm, meaning all VAT-free shopping finished for all eligible customers. The discount was initially scrapped when the UK left the European Union, then it was reinstated as part of the mini-budget in September 2022. The measure was then reversed again by Jeremy Hunt’s mid-October reversal of almost all of the announcements introduced by Kwasi Kwarteng. 

On the sending of the correspondence, Victoria Brownlie, Chief Policy Officer at the Council said: ‘Sadly, the UK no longer offers tax-free shopping incentives to overseas visitors. I don’t think the Government could have foreseen the additional impact this would have on businesses which have also been faced with challenging footfall numbers both domestically and overseas from Brexit, COVID, the war in Ukraine, spiralling energy bills and the cost-of-living crisis.

‘To say that every additional pound counts for many businesses at present is not an understatement. The Council has therefore called on the Treasury to reinstate this measure for tourists coming to the UK. This will not only help retail directly but also wider industries such as spas and salons, bars and restaurants, theatres and tourist attractions. Evidence suggests that the full impact of the policy on Treasury revenues would be a net positive of £350m each year, so for us, it’s an easy-win measure for the Government to introduce which would really ease the current burden on businesses and show the rest of the world that the UK is open to visitors.’ 

Read the letter calling for VAT-free shopping below:

Download and read the letter here.