Recent data from the Office for National Statistics International Passenger Survey has revealed that tourist visits to the UK are still significantly lower than pre-pandemic levels. In 2022, there were 31.2 million visits made by overseas residents to the UK, a notable increase from the 6.4 million visits recorded in 2021 when travel restrictions were in place. However, this figure is still below the 40.9 million visits recorded in 2019.
Retailers and industry bodies have expressed concerns about this decline in tourist numbers and have been advocating for the reinstatement of the VAT-free shopping perk for tourists. Many believe that the removal of the ability to claim back VAT on purchases made in the UK and taken home by tourists, instead of having the items shipped, has had a significant impact on visitor numbers.
This issue is further highlighted by the rebound in tourist traffic seen in mainland Europe. Figures from April 2023 show a surge in visitors from China, the US, and Gulf countries to countries like France, Italy, and Spain. Tax-free shopping is believed to be a major factor influencing tourists’ choices.
Dee Corsi, CEO of the New West Company and Chair of the Association of International Retail, has voiced concerns about the UK’s failure to recover to 2019 levels, especially compared to the growth seen in other European cities. Corsi believes that the removal of tax-free shopping has created a price disadvantage for the UK, making it less attractive as a global shopping destination.
The introduction of new hurdles for EU residents, who will soon have to pay for an Electronic Travel Authorisation before entering the UK, could have been offset by offering tax-free shopping in the UK. However, without this advantage, the UK may struggle to regain its position as a top tourist destination.
Pressure is mounting on the government to reconsider the VAT-free shopping perk for tourists as evidence continues to support its positive impact on the tourism industry. By reinstating this perk, the UK could potentially boost visitor numbers and spending, aiding in the recovery from the pandemic’s impact and restoring its appeal as an attractive destination for international tourists.
Useful Links:
1. VAT Retail Export Scheme – GOV.UK
2. VisitBritain – Domestic Growth Plan
