On 1st January 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 Britain's competitiveness, hampered its retail, hospitality and manufacturing sectors, and had a considerable knock-on effect on regions across the United Kingdom.
The benefits of this scheme were felt across the UK, by manufacturers as well as retailers – for instance, Wedgwood based in Staffordshire, 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.
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.
In 2023, an Oxford Economics study commissioned by our partners at the Association for International Retail (AIR) showed that rather than costing the Treasury £2bn, reintroducing tax-free shopping would make an extra £340mn for the Exchequer.
