The Conservative party has pledged to restore tax-free shopping for overseas visitors if they re-enter government. The party stated it would reinstate VAT refunds for eligible visitors from outside the EU, a tax-break that was removed in 2021 under former chancellor Rishi Sunak.
Since the abolition of tax-free shopping, the UK has reportedly lost ground as a major European shopping destination. Analysis from the Centre for Economics and Business Research (Cebr) indicates that real visitor expenditure has dropped by 8.7% since 2021, with average spending declining from £848 to £786.
Kemi Badenoch, leader of the Conservative party, said the current situation is damaging small manufacturers, suppliers, and jobs across the UK. She added that sending shoppers to other countries is "ignorant of the reality that they bring much-needed income."
To offset the estimated £540m annual cost of reintroducing tax-free shopping, the Conservatives plan a "crackdown" on unpaid NHS tourism. This includes more consistent charging for ineligible patients, minimum recovery targets for debts, and requiring full debt repayment before visa applications or renewals are considered.
Cebr analysis suggests that fully restoring the scheme could attract up to 2.3 million additional visitors, generating £4.1bn in extra spending. The think tank also estimated that every £1 of VAT refunded could create up to £1.5 in other taxes.
Business leaders and retail bosses, including chief executives from Kurt Geiger, Fortnum & Mason, and Charles Tyrwhitt, have welcomed the pledge. Brian Duffy, chief executive of Watches of Switzerland, stated that restoring tax-free shopping would "help make the UK more competitive as a global destination for luxury retail and tourism." Helen Dickinson, chief executive of the British Retail Consortium, added that removing the tax break put the UK at a "clear disadvantage."