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Heathrow warns of 2,000 job losses due to tax free shopping changes

Lauretta Roberts
11 December 2020

The chief executive of Heathrow airport has warned that 2,000 jobs are at stake due to impending changes to tax free shopping after the Brexit transition period ends on 31 December.

John Holland-Kaye has called upon the Government to abandon the decision to prevent tourists from shopping tax free and has also call for further Government support, including full business rates relief for all UK airports.

Chancellor Rishi Sunak is introducing new tax free shopping rules from 1 January meaning that tourists can no long shop tax free in shops and airports for goods they take away with them. They may shop tax free for goods they ship to their homes, but these will incur duties meaning the benefit is all but lost.

The Government has argued that the scheme, which many brands and retailers had hoped would be extended to EU citizens after Brexit to make the UK a more attractive tourist destination, is too expensive to administer.

It has also argued by the Government that retailers who offer the tax free service are putting the rest of the high street at a disadvantage. However the move has been met with overwhelming opposition from retailers and trade bodies such as luxury group Walpole and the New West End Company.

A number of big name retailers from across the board in fashion have written to the Chancellor expressing their opposition to the move, including the chiefs of Paul Smith, Superdry, The White Company, Mulberry, Marks & Spencer, Ted Baker, Charles Tyrwhitt, Hackett.

Scottish business leaders have also expressed dismay saying the move presented a “clear and present risk” to tourism and jobs in the UK and is urging Sunak to "urgently reconsider" the decision.

Now Heathrow's Holland-Kaye has added his voice to the campaign saying: “2021 should be the year of Britain’s economic recovery.

“But recent announcements, such as the tourist tax, could be the final nail in the coffin for struggling businesses such restaurants, hotels and theatres that rely on inbound tourists, as well as for retailers.

“To make global Britain a reality, the Government should be helping the aviation sector to survive, to develop routes to our key trading partners, and attract businesses and tourists to come to Britain to spend their money.”

Travel retail was once a lucrative market for retailers, particularly those selling electronics and luxury goods. However traveller numbers have fallen off a cliff due to the global pandemic. Heathrow revealed that passenger numbers for November were down 88% compared with the same month last year with just 747,000 people travelling through the airport last month.

With passenger numbers not expecting to recover for some time the airport has also revealed that its Terminal 4 will remain closed throughout 2021. Terminals 3 and 4 have been closed since April and May respectively, with all flights currently operating from Terminals 2 and 5.

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