The tax-free shopping system was abolished in 2021 following Brexit—a decision widely criticized across economic sectors. Since then, multiple independent studies have shown that the absence of this benefit has negatively impacted the UK’s competitiveness compared to other European destinations like France, Italy, and Spain, which continue to offer VAT refunds to non-EU tourists. In particular, there has been a notable decline in average international visitor spending and a drop in luxury purchases, hitting cities like London, Edinburgh, and Manchester especially hard.
The letter's signatories argue that reinstating tax-free shopping could significantly boost arrivals of high-spending tourists from key markets such as China, the United States, the Gulf countries, and Southeast Asia. These travelers, known for their high expenditure on fashion, watches, jewelry, and cultural experiences, have in recent years opted for European destinations where they can benefit from tax refunds. Industry estimates suggest that restoring tax-free shopping could bring in over £4 billion annually to the UK economy, not to mention the indirect boost to employment, infrastructure investment, and urban regeneration.
Retailers also point out that the benefits would extend far beyond London, positively impacting the entire UK, including Scotland, Wales, and the north of England, where efforts are underway to decentralize tourism and promote lesser-known regions. Reintroducing this incentive could help build a more balanced and sustainable tourism model while boosting closely linked sectors such as transport, hotels, restaurants, and cultural offerings.
The UK Treasury has previously stated that removing tax-free shopping was a matter of tax fairness and protecting public revenues. However, business groups argue that the lost revenue would be more than offset by increased consumption and indirect tax collection. They also emphasize that international tourists place no burden on the UK’s public services and that their primary contribution to the economy is through direct spending on goods and services.
The call has gained support among some Members of Parliament and local authorities, who see tourism as a crucial driver of economic growth in the post-Brexit era. Although international tourism is on the rebound, it has yet to reach pre-pandemic levels, and retailers believe that now is the time to take decisive action to enhance the UK’s global appeal.
In a global environment where cities compete fiercely to attract high-value tourists, the return of tax-free shopping is seen as a practical, effective, and quickly implementable tool. The private sector has expressed its willingness to work closely with the government to design a transparent, efficient, and secure system that makes the UK a top priority for international travelers. In this context, the government’s decision could have a profound impact on the country’s ability to reclaim a leading role in high-value tourism, revive the retail sector, and strengthen its image as a modern, open, and competitive destination.
