Mayor of London Sadiq Khan has joined business leaders in calling for the reinstatement of duty-free shopping for overseas visitors to the UK, including people coming from European Union countries.
Boris Johnson’s government axed the instant rebate scheme, which allowed visitors to reclaim 20% VAT on goods as they left the UK, as part of the Brexit agreement of January 2020.
It means shopping on the continent, where countries continue to offer VAT rebates, is 20% cheaper than in the UK.
Even British shoppers can hop over to cities in Europe to shop for high value goods like luxury watches and enjoy the saving.
The Mayor’s office operates autonomously from the Westminster government, but there will be hopes that Mr Khan, who leads a Labour authority for the capital, may influence Sir Keir Starmer as he draws up his manifesto for the next general election.
VAT rebates were set to be reintroduced by the short-lived government under Liz Truss as a way of stimulating the economy, but the idea was abandoned by Rishi Sunak when he took office.
A Treasury spokesperson responded to last week’s letter saying: “Introducing a wide-ranging VAT-free shopping scheme would come at too high of a cost, as has been supported by previous estimates from the Office for Budget Responsibility.”
It is not just London that might benefit from duty free shopping for incoming visitors.
John Robinson, managing director of jewellery and watch business David M Robinson, told WATCHPRO that luxury shoppers benefit cities across the UK.
Hotels, restaurants, retail and entertainment are interconnected and all benefit from high spending tourists in cities like Manchester and Liverpool, he says.
Mr Khan co-signed a letter along with a slew of business leaders saying that reinstating duty-free shopping would help retail and hospitality sectors “at a time they need it most”.
Steve Medway, CEO of the Knightsbridge and King’s Road Partnerships, which represents over 500 businesses in central London warns that shoppers from China, which will be free to travel again this year, will choose Paris or Milan instead of London because shopping will be 20% cheaper on the continent.
Tax-free shopping is available to all non-UK visitors who purchase items in store and have them sent directly to their overseas address.
