The British Beauty Council supports the governments investigation into the possible introduction of a new tax free shopping incentive for overseas visitors
This week, it has been announced that the Treasury’s independent forecaster, the Office for Budget Responsibility (OBR), will review the costs and benefits of its 2020 decision to end the VAT retail scheme. This move suggests a willingness from Government to consider the implementation of a new VAT-free shopping scheme which will help boost sales, tourism and global beauty.
Over the last year, the British Beauty Council has been supporting the cross-industry call for the introduction of a new VAT-free shopping scheme following the scrapping of previous incentives in 2020.
On top if joining other sectors in the signing of a letter pushing for change, the Council also highlighted the importance of VAT-free shopping in its submission to the Spring Budget.
Knowing that the beauty industry straddles retail, tourism, manufacturing, services and culture, the lack of a scheme has been detrimental to business growth. What’s more, the removal of the previous scheme came at a time when beauty businesses were facing unique challenges due to the Covid-19 pandemic, and have therefore been hit doubly hard.
This is not just about beauty though, across all industries, British shops are losing £1.5 billion per year as non-EU international visitors choose to spend their money in France, Italy, and Spain where tax-free shopping schemes are in place.
If that wasn’t enough evidence in support of the introduction of a new VAT-free shopping scheme, the Centre for Economics and Business Research said the removal of tax-free shopping was costing the UK economy £10.7bn a year and deterring 2 million tourists annually.
‘The Council has long been calling for tax-free shopping incentives for overseas visitors which we know are so effective in drawing people to our neighbouring countries,’ starts Chief Policy Officer of the British Beauty Council, Victoria Brownlie.
Brownlie continues: ‘Far from just London, the benefits would be seen in factories manufacturing goods, regional airports and city centres – both in terms of direct sales but also in the services that tourists enjoy whilst they’re visiting the UK.’
Richard Hughes, chair of the OBR, has said that the investigation into a UK Vat retail export scheme is taking place within the first few months of 2024. It is thought that the findings and possible recommendations will be published in March, alongside the Chancellor’s Spring Budget.
