Businesses welcome Tory pledge to restore tax-free shopping

Top UK business leaders have expressed support for the Tory plans to reintroduce tax-free shopping for overseas visitors if the party secures government power. The Conservatives announced they would reinstate VAT refunds for eligible visitors from outside the EU, a measure that was discontinued in 2021 under former Chancellor Rishi Sunak.

Since the ban on tax-free shopping, the UK has experienced a decline in visitor expenditure, with tourism spending falling by 8.7% since 2021 and average spending decreasing from £848 to £786, according to a report by the Centre for Economics and Business Research (Cebr). Kemi Badenoch, the leader of the Conservative party, argued that British retailers are closing shops, causing negative effects on small manufacturers, suppliers, and jobs across the UK.

She questioned why tourists should be sent to other countries like France or Italy. The Treasury estimates that ending tax-free shopping would save the government around £540 million annually. The Tories plan to offset the cost of reintroducing tax-free shopping through a 'crackdown' on unpaid NHS tourism, including stricter patient charging, recovery targets for debts, and requiring full repayment before visa applications or renewals.

Analysis from Cebr suggests that fully restoring the scheme could attract up to 2.3 million additional visitors, generating £4.1 billion in extra spending. The think tank also estimated that every £1 of VAT refunded to tourists could generate up to £1.5 in other taxes. Business leaders and retail bosses welcomed the Tories' pledge to restore tax-free shopping, believing it would drive economic growth, boost employment, and enhance the UK's competitiveness as a global luxury retail and tourism destination.