UK opposition seeks to axe VAT on shopping for overseas visitors
A future Conservative government will restore VAT refunds for overseas visitors in an attempt to lure high-spending tourists back to Britain’s struggling high streets. London has been hit by a drop in spending, particularly among wealthy shoppers from the Arabian Gulf since the tax was imposed in the UK in 2021, unlike other major European cities popular with shoppers and tourists, such as Paris…
The UK opposition, led by Conservative leader Kemi Badenoch, is proposing to restore VAT refunds for overseas visitors in a bid to attract high-spending tourists back to Britain’s struggling high streets. The move comes after a drop in spending by wealthy shoppers from the Arabian Gulf since the tax was imposed in 2021, unlike other major European cities such as Paris and Milan.
According to VisitBritain, overseas visitor numbers in 2024 remained 1.3% below 2019 pre-pandemic levels, with real visitor expenditure 8.7% lower and average spending per visit falling from £848 to £786. The Centre for Economics and Business Research estimates that restoring tax-free shopping could generate £4.1 billion in additional spending, attract 2.35 million extra visitors a year, and boost gross VAT by up to £11.5 billion.
The Conservatives assert that the estimated annual £540 million cost of the scheme would be offset by measures such as cracking down on NHS tourism and more consistent charging of overseas patients. The proposal has garnered support from major retailers and tourism businesses, who argue that Britain is the only major shopping destination in Europe that denies international visitors a tax refund.
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