UK review for VAT-free tourist shopping

UK review for VAT-free tourist shopping

Caption LUXURY BRANDS: No VAT could boost tourist spending Photo credit: Flickr/Garry Knight

Britain’s Chancellor Jeremy Hunt has asked the Office for Budget Responsibility (ORB) to review the decision to scrap tax-free shopping for tourists.

Prime Minishter Rishi Sunak, who was Chancellor at the time, decided to abolish the VAT-free concession in 2021.

Sunak claimed that the benefits were “almost entirely” enjoyed by a handful of shops, restaurants and hotels in central London.

The move currently brings in an annual £2 billion (€2.34 billion) although its many critics, like fashion designer Sir Paul Smith, argue that this does not compensate for what is lost on tourist spending.

“It’s not always necessarily about rich shoppers coming to buy cheap handbags,” Sir Paul told Sky News, while revealing that one-third of his business relies on the tourism market.

“It’s the fact that when they’re here, they do spend money in our great cities,” he said.

He also pointed out that European hotels had recovered after the pandemic.   “We haven’t, so it’s about bringing people to the country and seeing all the fantastic things we’ve got.”

The designer is one of more than 400 business-owners who signed an open letter organised by hotelier Sir Rocco Forte, asking the Chancellor to eliminate what amounts to a tourist tax.

Shares in luxury brands climbed on Monday, February 4, in response to an article disclosing the requested OBR review which was published in The Sunday Times the previous day.

Shares in Burberry, Mulberry and Watches Of Switzerland Group all rose, but although hotel stocks were also boosted, the increase was less perceptible.

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Written by

Linda Hall

Originally from the UK, Linda is based in Valenca and is a reporter for The Euro Weekly News covering local news. Got a news story you want to share? Then get in touch at