British Beauty Council joins fresh call to reinstate VAT-free shopping

The British Beauty Council has urged the UK Government to re-introduce VAT-free shopping for international tourists, joining calls from retailers including Harrods and Selfridges.

In a letter to Chancellor Jeremy Hunt, the Mayor of London Sadiq Khan and a number of business groups have called for the return of VAT-free shopping to help "provide a much-needed boost to London's retail and hospitality sectors".

The letter suggests that treasury revenues would be net positive of £350 million each year by re-introducing the shopping scheme.

The VAT Retail Export Scheme in the UK ended on 31 December 2022, meaning that all VAT-free shopping ceased for all eligible customers. The discount was initially scrapped when the UK left the European Union. It was later reinstated as part of the mini-budget in September 2022, but dropped again in the mid-October budget reversal.

Victoria Brownlie, Chief Policy Officer at the British Beauty Council, said: “Sadly, since leaving the EU, the UK no longer offers tax-free shopping incentives to overseas visitors. I don’t think the Government could have foreseen the additional impact this would have on businesses also then faced with challenging footfall numbers both domestically and overseas from Brexit, COVID-19, the war in Ukraine, spiralling energy bills and the cost-of-living crisis. To say that every additional pound counts for many businesses at present is not an understatement.

"The council has therefore called on the Treasury to reinstate this measure for tourists coming to the UK which not only helps retail directly, but also wider industries such as spas and salons, bars and restaurants, theatres and tourist attractions.

"Evidence suggests that the full impact of the policy on Treasury revenues would be a net positive of £350 million each year, so for us it’s an easy win measure for the Government to introduce which would really ease the current burden on businesses and show the rest of the world that the UK is open to visitors.”