Chancellor urged to bring back VAT-free shopping 

Chancellor urged to give the economy an ‘instant boost’ by bringing back VAT-free shopping

The Chancellor can give the economy an ‘instant boost’ by reinstating VAT-free shopping for international tourists, according to a report. 

Jeremy Hunt would raise an extra £350million a year in tax revenues by reinstating the measure, research by economic forecaster Oxford Economics found. 

VAT-free shopping allows overseas visitors to claim back 20 per cent on their purchases in the UK. 

Short-sighted: Luxury retailers such as Hermes claim wealthy shoppers will head elsewhere

It was scrapped by then-Chancellor Rishi Sunak when the UK left the EU in 2021. 

Former Chancellor Kwasi Kwarteng tried to reintroduce the break in September’s mini-Budget, but the move was reversed by Hunt weeks later. 

It left the UK as the only European country not offering VAT free shopping to international visitors. 

This has fuelled concerns that wealthy Chinese, Middle Eastern and American shoppers will snub shopping destinations such as London and Manchester in favour of Milan and Paris. 

At the time, the Government claimed scrapping the tax break would save £2biliion per year. But Oxford Economics said the Government’s estimate is ‘inaccurate’. 

The study, seen by the Daily Mail, said the Treasury failed to account for the increased number of foreign visitors the scheme would attract. 

It said 1.6m more tourists would come to the UK to take advantage of VAT-free shopping, spending £4.1billion in hotels, restaurants and other attractions. 

The benefit of the increased spending would far outweigh the cost of VAT refunds. Conservative MP Sir Geoffrey Clifton-Brown, deputy chairman of Parliament’s spending watchdog, said the Chancellor should consider a U-turn on the policy. 

Last week Brian Duffy, boss of luxury watch retailer Watches of Switzerland, said axing the scheme was ‘short sighted’.