The benefits of this scheme were felt across the UK, by manufacturers as well as retailers – for instance Wedgwood based in Staffordshire, or Burberry, which manufactures in Yorkshire or Mulberry in the South West. We now see that visitors are shifting their spending to European cities like Paris and Milan, where tax-free shopping is still on offer.
On January 1st 2021, the Treasury withdrew the tax-free shopping scheme in the UK - despite extensive campaigning by Walpole and its partners. The loss of the scheme has been an ongoing burden to the UK’s competitiveness, hampered its retail, hospitality and manufacturing sectors and had a considerable knock-on effect on regions across the United Kingdom.
In 2022, non-EU visitor spending in Europe rose to 198% compared to 2019 but dropped by 28% in Britain over the same period.
An Oxford Economics study commissioned by our partners at the Association for International Retail in 2023 showed that rather than costing the Treasury £2bn, reintroducing tax free shopping would make an extra £340mn for the Exchequer.
The Government previously said that the scheme would cost around £2bn a year when fully operational. This estimate is rooted in an inaccurate set of assumptions.
The study found that the additional international visitor spending generated by tax-free shopping would:
support
£4.2bn
of GDP annually
While the return of tax-free shopping remains our number one priority, Walpole also engages with Government on a wide range of other tax and regulatory issues. These include business rates, tax support for manufacturing and exporting businesses, Sunday trading laws and environmental regulation.
