UK to reintroduce tax-free shopping for tourists

The United Kingdom (UK) says it will reintroduce tax-free shopping for overseas visitors to boost the country’s retail sector.

Kwasi Kwarteng, UK finance minister and chancellor of the Exchequer, said this on Friday during the presentation of a mini-budget to the parliament. 

The previous tax-free shopping scheme was abolished at the end of 2020 by Rishi Sunak, former chancellor of the Exchequer, after Brexit — the withdrawal of the UK from the European Union (EU). 

“Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centres, to feel the economic benefit. So we have decided to introduce VAT-free shopping for overseas visitors,” he said. 

Kwarteng said the government would replace the previous paper-based system with a digital one. 

“And this will be in place as soon as possible,” he said.

Linda Ellett, head of consumer markets, retail and leisure, KPMG UK, said the move would increase the UK’s competitiveness when it comes to attracting international visitors.

“This is all the more key as we look to find ways to create economic growth, return international tourism to pre-pandemic volumes, and withstand rising inflation on the high street,” she said.

Nigel Keal, chair, UK travel retail forum, welcomed the new development. 

“This is a fantastic announcement by a government that has been clear from the start of its intention to put aside Treasury orthodoxy and find new ways to generate growth for the UK economy and industries. The travel retail industry welcomes today’s news,” he said.