A renewed call to reinstate tourist tax-free (that is, VAT-free) shopping in the UK comes after the latest data shows domestic shoppers are “deserting” UK stores and “flocking” to the EU to take advantage of… tax-free shopping.
Spending’s increasing annually and has so far risen more than fivefold since 2021, according to the Association of International Retail (AIR).
So not only did the abolition of tax-free shopping in the UK suppress spending fro rest-of-world shoppers and fail to open a whole new market for EU tax-free shoppers, but it drove its own consumers abroad.
AIR and 500 businesses, including those at all price levels from Burberry to Primark, are again calling for government ministers to reinstate tax-free shopping for international visitors and make the UK ‘the shopping capital of the world’.
AIR data shows that Britons spent £742 million on VAT-free shopping in the EU in 2024. That compares to £147 million in 2021, £527 million in 2022, and £646 million in 2023.
And this fast growth is continuing in 2025 with spending in the first 22 weeks up 16% on the same period in 2024.
Further AIR findings show that France has become the most popular EU destination for British VAT-free shoppers, attracting 35% of all spending, with Paris accounting for 75% of this.
While the last government scrapped tax-free shopping for tourists in the UK at the start of 2021, it noted EU countries extended it to British shoppers for the first time.
The figures suggest that “as a consequence, Britons are increasingly shunning homegrown stores and travelling abroad to make significant purchases where they can reclaim sales tax”, AIR said.
It believes the findings “will increase pressure on ministers to reintroduce tax rebates for all international visitors – both EU and non-EU – to put British businesses back on a level playing field”.
Reversing the current policy would, according to AIR’s analysis, mean the new market for EU consumers alone would supercharge the national economy by over £3.65 billion a year, create 73,000 new jobs across the country, boost regions of the UK by £1.8 billion a year and generate over £500 million in additional VAT alone for the Treasury.
Derrick Hardman, chair of AIR, said: “The disproportionate increase in British visitor numbers to the EU show that a new market in shopping-led tourism has emerged.
“It’s sad to see British shoppers taking their business elsewhere. But they have worked out that the tax rebates they can get on the Continent more than outweigh the costs of hopping on the Eurostar or taking a cheap short-haul flight somewhere.
“It makes no sense for the UK to remain the only destination in Europe not offering tax-free shopping. Thanks to our position outside the EU, we now have a unique chance to reverse the policy of the last government and become the world’s shopping capital – offering tax rebates for both EU and non-EU shoppers.
“All the evidence shows that reintroducing a tax-free shopping scheme would more than pay for itself thanks to all the spending stimulated not just in retailers but on hotels, restaurants, transport, tourist attractions and entertainment.
“This Government has promised to pull every lever available to promote growth – here is an obvious one.”
Helen Brocklebank, CEO of luxury body Walpole, added: “Every pound spent by British and international tourists in Europe instead of the UK threatens growth, denies the Exchequer revenue and undermines the competitiveness of our retailers, manufacturers, hospitality businesses and iconic brands.
“As the sector body representing Britain’s high-value manufacturing and services industries, which export British excellence worldwide and support 450,000 jobs and £25.5 billion in tax revenues, we are calling for a simple reversal of the previous government’s policy. This would allow the UK to share in future growth, keep our towns, cities and tourism hubs globally competitive, and ensure businesses of all sizes can trade on equal terms with their European counterparts.”
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