Retailers and the hospitality sector have welcomed the planned return of value-added tax-free shopping for international tourists, saying it will help boost sales.
The government said it will consult on introducing a new tax-free shopping scheme for Great Britain and will update the scheme applied in northern Ireland.
The scheme will enable tourists to recover value-added tax on goods purchased on Main Street, at airports and other points of departure, and export them from the UK in their personal baggage.
The move, which will cost approximately £1.3 billion in 2024-25, when it is likely to be implemented – according to government documents published along with Kwasi Kwarteng. small budget Friday – canceling the long-term VAT exemption system in January 2021 By ex-adviser Rishi Sunak After Britain leaves the European Union.
The government said the consultations would “gather opinions on the approach and design of the plan” before handing it over as soon as possible.
Retailers, especially in tourist hotspots such as central London, have long called for the scheme’s return, saying its loss has led to tourists choosing to spend more elsewhere.
Helen Dickinson, chief executive of the British Retail Consortium, which represents most major retailers, said: “We welcome the reintroduction of tax-free shopping to tourists, which will boost sales and bring the UK into harmony with other European countries.”
But, she added, the government has not taken any measures to deal with the burden of business rates, the property-based tax that retailers say prevents them from competing with online specialists like Amazon.
“Retailers are facing enormous cost pressures, not only from energy bills, but also from a weak pound, high commodity prices, high transportation costs, a tight labor market and the cumulative burden of government-imposed costs,” Dickinson said.
What was missing from today’s announcement, however, was any mention of business rates, which are set to jump 10% next April, which will lead to unsustainable £800m tax increases on already stressed retailers. big. It is inevitable that these additional taxes will eventually be passed on to families in the form of higher prices.”
Kate Nichols, chief executive of Hospitality UK, the trade body representing restaurants, pubs and hotels, added: “While tax-free shopping for overseas customers is a welcome move to attract foreign tourists, the most impactful step is to reduce VAT for our local customers.
“Our VAT rate is the highest among modern economies, so if we want a globally competitive market, we need lower VAT and a fair alternative to business rates.”