Duty-free shopping to be reinstated for overseas visitors to the UK

Tourists used to be able to reclaim the taxes until former chancellor Rishi Sunak scrapped the rebate in late 2020

Britain has reintroduced VAT-free shopping for overseas visitors. EPA

Duty-free shopping in the UK will be reintroduced for overseas visitors, the country’s new chancellor announced on Friday.

Tourists will soon be able to claim all value-added tax paid on goods in plans unveiled by the government.

Shoppers used to be able to reclaim the taxes before they left the country at airports and refund agencies.

But former chancellor Rishi Sunak scrapped the rebate in December 31, 2020, despite fears it would cost 40,000 British jobs and £1 billion ($1.12bn) of investment.

Speaking in the House of Commons to announce the new government’s mini-budget, Kwasi Kwarteng said the move would benefit British retailers.

“Britain welcomes millions of tourists every year and I want our high streets and airports, our ports and our shopping centres to feel the economic benefit,” he said.

“So we have decided to introduce VAT-free shopping for overseas visitors.

“We will replace the old paper-based system with a modern, digital one.

“This will be in place as soon as possible. This is a priority for our great British retailers, so it is our priority too.”

Industry experts welcomed the move, saying British retailers have been lobbying for a reinstatement of the rebate for two years.

"The government's reversal on tax-free shopping in today's mini-budget is a huge relief after nearly two years of lobbying with the retail sector for this," said Hugh Seaborn, chief executive of Cadogan, a property manager, investor and developer based in Chelsea.

"International visitors are fundamental to London and the UK's recovery, and we now have a level-playing field alongside other European cities that never ceased to offer this incentive.

"We are firmly back on the map as an extremely attractive destination and unbeatable once more in terms of a heady mix of culture, heritage and fantastic shopping."

The rebate is among a series of measures announced on Friday, designed to break the “cycle of stagnation” in the British economy.

They include a cut in the basic rate of income tax to 19p from April 2023 and the abolishment of the top rate of tax for higher earners.

The government also lifted the cap on bankers’ bonuses, raised the threshold for stamp duty to £250,000 and reversed an increase in National Insurance.

"We need global banks to create jobs here, invest here and pay taxes here in London — not in Paris, not in Frankfurt and not in New York," Mr Kwarteng said.

"We are securing our place in a fiercely competitive global economy, with lower rates of corporation tax and lower rates of personal tax."