Sadiq Khan calls to re-introduce VAT-free shopping to lure 1.5M more tourists to London

Senior retail figures have backed Sadiq Khan’s call to re-introduce VAT free shopping for tourists, claiming the move would make a “huge difference” to the sector.

Kay Buxton, chief executive of Marble Arch London BID, said that the Chancellor Jeremy Hunt  “missed a trick” at the last Budget by not reintroducing tax-free shopping and claimed the move could increase spending in the capital by £2.1bn.

Buxton explained: “Research from the Association of International Retail found that reintroducing tax-free shopping would have brought in an additional 1.6 million visitors in its first full year.

“It also estimated that these new visitors would have spent an extra £2.1bn on shopping, along with an additional £1bn on other goods and services such as hotels, restaurants and other leisure activities which would have been a vital boost for these businesses.”

Mayor Khan called for the reintroduction of VAT-free shopping, which has not been available since Brexit, in a letter addressed to Hunt. It was signed by over 20 senior industry figures including managing directors at Harrods and The Ritz.

VAT-free shopping was abolished at the start of Brexit in January 2021 and made shopping in the UK 20 per cent cheaper for tourists.

It was reintroduced in Kwasi Kwarteng’s mini-budget in September 2022 but scrapped again in what was seen as a major blow for the West End with tourists shunning London for purse-friendlier shopping destinations such as Paris and Milan.

In his letter Khan said that London’s success in attracting overseas visitors is vital not just to the capital, but to the “whole UK economy”.

An expert from the letter read: “The Prime Minister has stated that his ambition is to grow the economy this year, and the Government should be looking for ways to secure the capital’s status and reputation as a global city that is open to visitors and investment – not providing reasons for tourists and businesses to look elsewhere.”

“We support the call for the return of tax-free shopping for overseas visitors. It would provide Britain with a much-needed boost and help support thousands of jobs amid the current economic crisis,” Dee Corsi, CEO, New West End Company told media.

Corsi said: “Currently, Britain is the only European country not to offer tax-free shopping to international visitors, making our high streets far less appealing to international tourists, who are instead favouring competing cities such as Milan and Paris, which effectively offer them a 20 per cent discount. Reintroducing tax-free shopping would go a long way to bringing visitors back to our shores.”