Interviews, insight & analysis on digital media & marketing

Half of UK consumers back a return to VAT-free shopping for tourists

Despite the Government refusing to overturn the abolition of the duty-free shopping for tourists in the Spring Budget, half (50%) of UK consumers want the scheme to be reinstated, according to the latest research from Retail Technology Show (RTS). 

Original research of over 1,000 shoppers by the RTS, which takes place at London Olympia on the 24 and 25 April 2024, revealed half (50%) of consumers think the Government should reinstate VAT- or duty-free – shopping for tourists to encourage retail spend by those visiting the UK and support the retail sector. 

The VAT Retail Export (VAT RES) scheme, which previously allowed tourists from outside the EU to claim back VAT on goods brought in the UK – effectively making them 20% cheaper – was abolished by the then-Chancellor, Rishi Sunak, in 2020. 

With RTS’s poll showing that 62% of consumers in London, one of the major cities and tourism hubs impacted by the removal of the scheme, would back a return to VAT-free shopping for tourists, data from the New West End Company showed that 92% of retail, hospitality and leisure businesses in the capital have been impacted by the loss of VAT RES.  Its data suggests that the impact of removing tax-free tourist shopping is increasing the burden on West End businesses alongside with other pressuresincluding the cost-of-living and inflation (both 58%).

While the Government did consider a rethink, asking the Office for Budget Responsibility (OBR) to review the policy ahead of the most recent Spring Budget in March this year, Chancellor Jeremy Hunt declined to restore tax-free shopping for overseas tourists following the review, prompting backlash from retail businesses and industry bodies. 

The Association of International Retail (AIR) estimates that scrapping the duty-free shopping for tourists has already cost UK retailers £1.5billion in spend due to tourists opting to holiday (and shop) in other countries.  Meanwhile Walpole, the industry body that represents the UK’s luxury retail industry, suggests reinstating the VAT-relief for holiday shoppers would add £4.1billion pounds to the UK economy. 

Matt Bradley, Event Director at the Retail Technology Show, commented: “With retailers already facing challenging trading conditions – from inflationary pressures and consumer demand being weakened by the cost of living to disrupted supply chains – this feels like yet another hoop through which they must jump.  We know that retail and tourism often go hand-in-hand, with one mutually benefitting the other – and that’s why many of our major tourism hubs, like London and Manchester, often deliver some of the very best examples of retail magic and immersive shopping experiences.”

For the first time the RTS will be offering up a London Store Tour, exclusively for brands and retailers attending the show.  Taking place on Tuesday 23 April, the day before the RTS opens its doors, retailers can sign up to join a limited number of exclusive tours, allowing them to experience first-hand London’s best physical retail. With a focus on  design, technology and experiential activations, the RTS London Store Tours, sponsored by Newstore, will be expertly curated and hosted by retail influencer, Ian Scott

Register for free to attend the industry’s flagship event here.

Research

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