Autumn statement: Chancellor reviewing decision to axe duty-free shopping for tourists

The decision to axe VAT-free shopping for tourists visiting the UK could be reviewed in future, Jeremy Hunt has suggested.

The Chancellor said the Government was “looking again at the numbers” after duty-free shopping was scrapped at the 2022 autumn statement.

Tourists used to be able to claim back the 20% VAT rate on goods bought in the UK, but last year’s decision to end this has been branded a “tourist tax”.

Conservative MP Sir Geoffrey Clifton-Brown raised the issue in the Commons following this year’s autumn statement.

The Cotswolds MP said: “There was no mention in his excellent budget of the tourist tax.

“British tourists going abroad spend billions of pounds benefitting those countries, and yet we actively discourage, and figures show that we are doing so, we actively discourage high-spending tourists coming from abroad and benefitting our shops and hospitality venues.”

Hunt responded: “Can I reassure him that we want to do everything possible to make our tourism and our retail industry competitive and we want to encourage international visitors.

“When we changed policy on this particular issue a year ago, it was because the cost was around £2.5 billion-a-year and we didn’t think we could afford to continue doing it, but we are looking again at the numbers in the light of the most recent data and we can see what has happened to comparative shops in Paris and Milan, and we will review that and see if it is still that expensive, and I hope it isn’t.”

The move would be welcomed by the retail industry, which has been left disappointed by the autumn statement given its failure to address the business rates burden for retailers with multiple stores.

Many brands and retailers, in particular those in the luxury sector, have been lobbying the Government to reinstate duty-free shopping saying the decision to scrap it was putting the UK at a disadvantage to other major European capitals.

Earlier this year Burberry chairman Gerry Murphy challenged Prime Minister Rishi Sunak at a business leaders gathering saying, the move (which was made by Sunak when he was Chancellor) was a "spectacular own goal".

"It is somewhat perverse that on the day that we left the single market, a decision by, I think it was by you as Chancellor, to remove the VAT refund for tourists made the UK the least attractive shopping destination in Europe.

"Leaving the EU has had a significant friction effect on trade, hopefully not forever, but it is the case today that it is a drag on growth. So, we would ask you to look at this specific one. This is a spectacular own goal that can be reversed by a decision from you or from the chancellor," Murphy told Sunak at the Business Connect conference in London in April.

Luxury trade body Walpole also produced a report that revealed the return of tax-free shopping would boost the economy by £1.2 billion. The report argued that high-spending tourists did not only buy luxury items but spent more on other goods and services up and down the country.

Main image: Chancellor of the Exchequer Jeremy Hunt leaves 11 Downing Street, London, for the House of Commons to deliver his Autumn Statement (Stefan Rousseau/PA)