Autumn Statement: Retailers call for tax-free shopping for tourists

The Association for International Retail (AIR) has released a report ahead of the Autumn Statement on Thursday calling for the reintroduction of tax-free shopping (TFS) for international shoppers.

The research, carried out by Oxford Economics, claims that the reintroduction of TFS would sustain 78,000 jobs and £4.1bn in GDP by 2026.

Tax-free shopping was scrapped after Brexit but was considered in the Government’s autumn growth plan. Plans to reintroduce the scheme were reversed in October. The Treasury estimated the scheme would cost the Exchequer £1.3bn in 2024/25, increasing to £2bn in 2025/26.

However, the report claims that the modelling used in this estimation was inaccurate. It added that it failed to account for the effects of incentives to visit and shop in the UK.

The research suggests that international customers would be more incentivised to shop in the UK due to lower prices. This would in turn stimulate the economy and result in £1.1bn in tax revenue for the Exchequer.

The report from AIR, which represents British businesses with international customers, claims that the direct fiscal cost of reintroducing TFS would be over 70% less than the Treasury’s estimate, as well as lead to an increase in foreign visitor spending of £3.1bn by fiscal year 2025/26.

Kay Buxton, chief executive of the Marble Arch London Business Improvement District, said: “It is critical that the Chancellor offers support to businesses in the hospitality and leisure industry, especially as they tackle the challenges posed by high inflation and soaring energy bills, as well as the threat of a fall in international tourism due to the global recession and the rising cost of living […] any fall in international tourism would be a huge blow to our hospitality and leisure businesses.

She added: “If the Chancellor does reintroduce tax-free shopping in his Autumn statement it will encourage more international visitors back to the UK, and London in particular, which can only be a good thing for the capital’s retail and hospitality businesses who will benefit from the additional spending they are allowed to bring.”

The Chancellor Jeremy Hunt will deliver his Autumn Statement to Parliament on Thursday.