In a letter published on 1st February 2023, Mayor of London Sadiq Khan called on Chancellor Jeremy Hunt to reinstate tax-free shopping for international visitors.
Alongside Knightsbridge Partnership, local businesses, leading retailers and industry figures, the Mayor asked the Chancellor to consider reintroducing tax-free shopping. This would include undertaking an independent assessment of the full impact of tax-free shopping on the UK economy and tax revenues, in order to make a decision based on “full and accurate information”.
Hugh Seaborn, Chief Executive at Cadogan, commented:
“We welcome the Mayor’s letter in support of the return of VAT-free shopping. At a time when we should be focusing on incentivising international travel, we are now at a distinct and unnecessary disadvantage to our neighbouring EU cities.
We urge the government to carefully reconsider the potential impact keeping this policy will have. It is essential to do all we can to strengthen and preserve London’s appeal on the world stage and boost economic recovery.”
This week, BBC News also reported that Steve Medway, CEO of Knightsbridge Partnership, had called on the Chancellor to “see reason”.
“The withdrawal of tax-free shopping puts London as an international tourist destination at a disadvantage,” he said, highlighting that shoppers from China would receive the tax reduction “if they choose Paris or Milan instead of London”.
Knightsbridge Partnership has been working for months on behalf of local businesses to lobby for this request. Whilst the Chancellor’s statement to Parliament on 17th November 2022 indicated scrapping the scheme would yield a further £2bn a year in taxes to the government, in contrast a recent Oxford Economics study into the impact of tax-free shopping on the UK economy suggested it generated a net increase in national revenue of £350m a year. This is because the Treasury’s estimates do not account for international visitor numbers and their spending across London’s hospitality sector, or the wider revenue implications for the rest of the UK.
We eagerly await the Chancellor’s response.