Chancellor urged to bring back tax-free shopping

Business leaders are urging the Chancellor to revive a tax policy to boost the economy.

Rachel Reeves faces call to restore tax-free shopping benefit

Business leaders are advocating for a revival of tax-free shopping for international visitors, which they claim could bring a £3.7 billion boost to the UK economy. This proposal comes as Chancellor Rachel Reeves prepares for the Autumn Budget. The initiative seeks to reinstate the VAT retail export scheme, scrapped in 2021 following Brexit, which previously allowed international shoppers to reclaim 20% VAT on purchases. The Association of International Retail argues that doing so would create approximately 73,000 jobs and enhance Britain’s attractiveness as a shopping destination. Tax-free shopping is seen as a critical avenue to stimulate the economy, especially as competition from European countries is intensifying due to their more favorable tax incentives.

Reviving the tax-free shopping scheme represents a potential turning point for the UK’s tourism and retail sectors. With visitor numbers still recovering post-Covid, this move could address the competitive disadvantage the UK currently faces compared to countries like Spain and France. Business leaders are not just discussing a loss of competitive edge; they argue that this proposed policy could renew the UK’s position on the global stage, transforming it into the top shopping destination for international tourists. The call for action reflects a broader belief that seizing the benefits of Brexit requires bold policy changes that prioritize economic recovery and growth.

Highlights

The upcoming Budget could be pivotal for the UK's economic future and its place in global tourism.