Foreign visitors to Britain will be allowed to shop without paying VAT

Foreign visitors to Britain will be allowed to shop without paying VAT in a bid to boost tourism and UK retailers – but firms demand the Chancellor move to cut the sales tax for ALL shoppers to offset massive rise in costs

Britain will introduce sales tax free shopping for overseas visitors to boost the retail sector, finance minister Kwasi Kwarteng said today.

A previous tax-free shopping period was abolished at the end of 2020 as the Government wrestled with Covid and the collapse in tourism.

Mr Kwarteng also said the government would replace the previous paper-based system of reclaiming tax with a digital one, with changes ‘in place as soon as possible’.

The move was welcomed by many business groups, but others said that VAT should be reduced for British shoppers as well to hand a wider boost to the high street, along with business rate relief.

A previous tax-free shopping period was abolished at the end of 2020 as the Government wrestled with Covid and the collapse in tourism.

A previous tax-free shopping period was abolished at the end of 2020 as the Government wrestled with Covid and the collapse in tourism.

Kate Nicholls

Helen Dickinson

Helen Dickinson, chief executive of the British Retail Consortium, said: ‘What was missing from today’s announcement, was any mention of business rates, which are set to jump by 10 per cent next April.’ Her UKHospitality counterpart Kate Nicholls added: ‘While tax free shopping for overseas customers is a welcome step to attract overseas tourists, a far more immediately impactful step would be to reduce VAT for our domestic customers.’

Helen Dickinson, chief executive of the British Retail Consortium, said: ‘We welcome the reintroduction of tax-free shopping for tourists, which will boost sales and bring the UK back in line with other European nations.

‘Retailers are facing immense cost pressures, not just from energy bills, but also a weak pound, rising commodity prices, high transport costs, a tight labour market and the cumulative burden of government-imposed costs. 

‘Yet what was missing from today’s announcement, was any mention of business rates, which are set to jump by 10 per cent next April, inflicting another £800million in unaffordable tax rises on already squeezed retailers. It is inevitable that such additional taxes will ultimately be passed through to families in the form of higher prices.’

Her UKHospitality counterpart Kate Nicholls added: ‘The stated objectives of boosting growth and tackling inflation rightly put business at the heart of the Govt’s agenda, but today’s measures will take time to take effect.

‘The Chancellor committed to making the UK a globally competitive tax regime, yet overlooked two obvious levers to achieve that, through lower VAT and business rates reliefs. Our VAT rate is the highest in Europe, which is starkly at odds with ambitions for global tax competitiveness and will hopefully be addressed in the autumn Budget, if not before.

‘While tax free shopping for overseas customers is a welcome step to attract overseas tourists, a far more immediately impactful step would be to reduce VAT for our domestic customers. Our VAT rate is the highest among modern economies, so if we want a globally competitive market, we need lower VAT and an equitable alternative to business rates. Without such measures – which would help to keep prices down for customers – thousands of businesses and many more jobs will be lost.’

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