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UK Trade Bodies Push for Return of Tax-Free Shopping to Offset Tariffs and Brexit Losses

Four major trade groups urge Chancellor Reeves to reinstate VAT-free shopping for international tourists, but the Treasury maintains there are no plans to revisit the policy.

London's Bond Street is the epicentre of the UK luxury goods industry (Photo: Mike Kemp/In Pictures)
The exemption for international shoppers was removed in 2021
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Overview

  • The British Retail Consortium, British Beauty Council, Walpole, and British Fashion Council have jointly petitioned Chancellor Rachel Reeves to reinstate the tax-free shopping scheme scrapped in 2021.
  • The trade bodies argue that restoring VAT-free shopping would attract high-value international tourists, who spend significantly more than average visitors, benefiting the UK economy by an estimated £8 for every £1 spent.
  • The push for reinstatement comes as UK businesses face economic pressures from US tariffs, which have disrupted transatlantic trade and damaged profitability in key sectors like fashion and beauty.
  • Research highlights a 43% average drop in UK luxury exports to the EU post-Brexit, with fashion and accessories hit hardest at 64%, compounding the economic challenges for domestic industries.
  • Despite the renewed calls, a Treasury spokesperson reiterated that there are no current plans to reintroduce a tax-free shopping scheme, citing existing VAT relief options for exported goods.