London Gatwick has been one of many businesses and organisations to continue to call on the Chancellor, Rt Hon Jeremy Hunt MP, to reinstate tax-free shopping for international visitors to the UK, after it was scrapped in 2021.
Part of the government’s rationale for abolishing the scheme was that it ‘cost £2 billion per year to administer’ – an estimate debunked by a recent study from Oxford Economics. The study has demonstrated that reinstating a tax refund scheme would actually provide a £340million boost to the UK Exchequer every year, with EU visitors also able to benefit.
A further study by the UK Travel Retail Forum (UKTRF) and the Association of International Retail (AIR) shows that pre-COVID, the scheme was used by around 4.8 million people - 30% of all non-EU visitors – which is three times greater than the Treasury’s estimate. Many of these were from high-spending markets such as Asia, the Middle East and the USA – all of which have direct flights to London Gatwick.
The airport alone has seen an 8% decline in spend within its fashion retail outlets since tax-free shopping was removed, and a 3% decline in overall spend across the airport’s retailers. This translates into millions of pounds in lost revenue.
And it’s not just aviation that is affected. Based on figures from the British Retail Consortium (BRC), tax-free shopping supported 70,000 jobs across the whole of the UK. And that doesn’t consider the thousands of indirect jobs, including those in hotels, restaurants and attractions. Conversely, tax-free shopping is still available in all EU countries, diminishing the attractiveness of the UK as a holiday destination. That means fewer people staying in hotels, visiting tourist attractions, buying souvenirs, eating out in restaurants, or treating themselves to a night at the theatre.
A study by Oxford Economics surmised that the reintroduction of tax-free shopping would attract more than 1.6 million extra visitors to the UK in 2025/26 and stimulate an extra £2.8 billion of tourist spending.
Thanks to the work of Henry Smith MP, Sir Geoffrey Clifton-Brown MP and the Future of Aviation Group of MPs and Peers, Parliament debated this issue twice upon its return from summer recess. London Gatwick will continue to lend its voice to the growing campaign for tax-free shopping to be reinstated in the Chancellor’s Autumn Statement.