Retailers and the hospitality industry have welcomed the planned return of VAT-free shopping for international tourists and say it would help boost sales.
The government said it would discuss the introduction of a new duty-free shopping scheme for Britain and modernize the existing one in Northern Ireland.
The scheme allows tourists to reclaim VAT on goods bought on high street, airports and other departure points and exported from the UK in their personal luggage.
The move, which will cost nearly £1.3bn in 2024-25, when it’s likely to be brought in – according to government documents published Friday along with Kwasi Kwarteng’s mini-budget – makes the abolition of the VAT-free scheme for the long haul. term undone in January 2021 by former Chancellor Rishi Sunak after Brexit.
The government said a consultation would “collect views on the approach and design of the scheme” before delivering it as soon as possible.
Retailers, especially in tourist spots such as central London, have long advocated the return of the scheme, as its loss had led tourists to choose to spend more elsewhere.
Helen Dickinson, the chief executive of the British Retail Consortium, which represents most major retailers, said: “We welcome the reintroduction of duty-free shopping for tourists, which will boost sales and bring the UK back in line with other European countries. “
But she added that the government had not taken steps to address the burden of corporate fees, the property tax that retailers say prevents them from competing with online specialists such as Amazon.
“Retailers are facing enormous cost pressures, not only from energy bills, but also from a weak pound, rising commodity prices, high transportation costs, a tight labor market and the cumulative burden of government-imposed costs,” Dickinson said.
“But what was missing from today’s announcement was any mention of corporate rates, which are set to rise 10% in April, forcing retailers already under pressure to pay an additional £800m in prohibitive tax hikes. Inevitably, such additional taxes will eventually be passed on to families in the form of higher prices.”
Kate Nicholls, the chief executive of UKHospitality, the trade association representing restaurants, bars and hotels, added: “While duty-free shopping for overseas customers is a welcome step to attract foreign tourists, a much more immediate impactful step would be to reduce VAT. for our domestic customers.
“Our VAT rate is the highest of any modern economy, so if we want a globally competitive market, we need a lower VAT rate and a fair alternative to business rates.”