Businesses representing over 1M employees urge Chancellor to restore VAT-free shopping

Tourism has always played a crucial role in the growth of the British economy, particularly in the retail sector. However, recent studies suggest that the introduction of a tourist tax, also known as the "tourist tax," is tarnishing Britain's sparkle as a global shopping destination. 

Today, leaders from the travel, retail and hospitality sectors have written to the Chancellor urging him to immediately restore VAT-free shopping for international tourists.

The letter, spearheaded by the capital’s leading campaign group, BusinessLDN, and signed by 18 organisations that represent almost 1.5 million people across the country, highlights how restoring the scheme would help maximise spending and boost our economy.

The UK is now at a stark competitive disadvantage to our international neighbours. Recent figures from Global Blue show that 10% of UK spending by international visitors in 2019 has now relocated to EU countries, which all offer tax-free shopping. The letter urges the Chancellor to act now to support jobs, growth and investment in London and the UK.

The letter has been sent today ahead of a debate in Parliament on tax-free shopping for international visitors on Thursday, 7 September.

Joint letter to the Chancellor:

Dear Chancellor,

Restoring tax-free shopping for international visitors

Ahead of the Westminster Hall debate on 7 September, we are writing to urge the Government to restore tax-free shopping to maximise spending from international visitors and boost our economy.

The decision to end tax-free shopping in 2021 was deeply misguided. The UK is now at a stark competitive disadvantage due to the fact we charge overseas shoppers 20% more than our international neighbours for the same goods. Every country in the European Union offers this incentive.

Unsurprisingly, the absence of tax-free shopping has weighed on our recovery following the pandemic. Recent figures from Global Blue show that 10% of UK spending by international visitors in 2019 has now relocated to EU countries. The number of American shoppers in the UK is now back to 2019 levels but this lags far behind France, Spain and Italy, which have doubled their American visitor numbers. This gap between the UK and EU is also evident when it comes to visitors from the Gulf and China.

Several studies have shown that reintroducing the scheme would significantly boost London and the wider UK economy by encouraging international visitors to spend here rather than abroad. It would attract more high-spending shoppers and in turn boost spending in hotels, restaurants, museums and theatres – as well as retail. This additional spending would more than compensate for the short-term loss of VAT receipts – delivering a significant net increase in tax revenues for the Exchequer annually.

Restoring tax-free shopping would ultimately be a win-win for business, the economy and the country. It would help the UK escape the low growth trap by boosting spending, including during the vital Christmas shopping period. It would also help us to seize opportunities to attract more visitor spending such as the Paris Olympics next summer. We urge you to restore tax-free shopping for international visitors to support jobs, growth and investment in London and across the UK. 

Yours sincerely, 

Peter Hogg, UK Cities Director, Arcadis

Paul Barnes, CEO, Association of International Retail

Simon Murphy, Chief Executive, Battersea Power Station Development Company

John Dickie, Chief Executive, BusinessLDN

Hugh Seaborn, Chief Executive, Cadogan

Steve Griffiths, Managing Director, East Midlands Airport

Inderneel Singh, Chief Executive, Edwardian Hotels London

Stewart Wingate, Chief Executive, Gatwick Airport Ltd

Toby Courtauld, Chief Executive, GPE

Amelia Bright, Executive Director, London Estate, Grosvenor

Ros Morgan, Chief Executive, Heart of London Business Alliance

Fraser Brown, Retail Director, Heathrow Airport 

Wendy Spinks, Commercial Director, High Speed 1

Gareth Powell OBE, Managing Director, London Stansted Airport

Chris Woodroofe, Managing Director, Manchester Airport

Dee Corsi, Chief Executive, New West End Company

Oliver Fenn-Smith, Chief Executive, The Portman Estate

Ruth Duston, OBE, Chief Executive and Founder of Primera