Britons desert UK stores for tax-free EU shopping
UK shoppers have spent 16pc more on tax-free shopping in the EU in 2025 so far compared to the same period last year, new figures from the Association of International Retail (AIR) show.
It follows a trend of higher spending in the EU after Brexit allowed UK shoppers to take advantage of the VAT-free shopping scheme across the Continent.
Since 2021, British tourists visiting the EU have been able to claim VAT back on their shopping under the bloc's tax-free shopping scheme. Last year, they spent £742m on tax-free shopping in the EU compared to £527m in 2022.
Derrick Hardman, AIR's chairman, said UK consumers had 'worked out that the tax rebates they can get on the Continent more than outweigh the costs of hopping on the Eurostar or taking a cheap short-haul flight somewhere'.
He said the figures showed that 'a new market in shopping-led tourism has emerged', adding: 'It's sad to see British shoppers taking their business elsewhere.'
It will add to pressure on Labour to consider reinstating the UK's VAT-free shopping scheme for overseas visitors in an effort to level the playing field with the EU. In April, Lisa Nandy, the Culture Secretary, opened the door to a rethink of the scheme.
While the EU extended tax-free shopping to UK tourists in 2021, the UK scrapped its own scheme the same year.
It means that since Brexit, overseas visitors have not been able to claim VAT back when they purchase items in Britain. Campaigners have argued that the decision deters around two million visitors from coming to the UK every year.
Companies such as handbag maker Burberry and high-end department store Harrods have claimed that the policy not only deters spending in UK stores, but disproportionately hurts domestic luxury companies.
That is because they say that shoppers are more likely to spend on the home-grown brands in the country they are visiting.
Mr Hardman said: 'It makes no sense for the UK to remain the only destination in Europe not offering tax-free shopping.'
He suggested the UK should seek to lure shoppers away from EU countries with more tourist-friendly policies to boost its economy: 'Thanks to our position outside the EU, we now have a unique chance to reverse the policy of the last government and become the world's shopping capital – offering tax rebates for both EU and non-EU shoppers.'
AIR analysis shows that providing tax rebates for EU shoppers into the UK alone would provide a £3.65bn boost to the economy every year and generate over £500m in additional VAT alone for the Treasury.
Sir Rocco Forte, the chairman of Rocco Forte Hotels, said: 'We see in our hotels that foreign visitors who would come for lengthy stays in the UK and return to us laden down with parcels are increasingly cutting short their stays and spending time in Europe, where they can still shop tax-free.
'The decision of the last government to scrap tax-free shopping, which had been available for decades, makes no sense and should be reversed immediately by any government serious about promoting economic growth.'
A Treasury spokesman said: 'The UK is one of the most visited countries in the world with international tourism driving billions into our economy.
'We are supporting the continued growth of this industry and will be launching a National Visitor Economy Strategy this autumn to help meet our ambition to welcome 50 million international visitors a year to the UK by 2030.'
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