Time to Review Tax-Free Shopping

Attis’ mission is to make Britain’s high streets the world’s top shopping destinations.

When the Chancellor asks departments to put forward growth-generating proposals, it seems extraordinary that one of the most powerful measures is still being overlooked. Restoring VAT-free shopping would cost the Government nothing, yet could deliver billions in new spending and tens of thousands of jobs across the country.

Estimates vary depending on methodology, but the story is consistent. Attis calculates the impact on high streets at around £5.65bn in additional annual sales and 100,000 new jobs. Oxford Economics forecasts a £4.1bn uplift to GDP and 78,000 jobs, while AIR’s most recent figures suggest £3.7bn in growth and 73,000 jobs. However you frame it, the numbers are compelling.

Visitors, spending and competition

International visitors are already a cornerstone of the UK economy. Between 2009 and 2019, their spending grew by an average of six per cent a year, three times faster than overall economic growth. Shopping consistently accounts for around a quarter of that spend, making it the single largest driver.

As global wealth and leisure time increase, the visitor economy is set to grow worldwide by billions each year. Britain still ranks among the world’s top ten destinations, but others are moving quickly. Gulf countries in particular are pouring investment into tourism as they prepare for life after oil. The competition is not standing still.

A costly misstep

Against that backdrop, the decision in 2021 to remove tax-free shopping for non-EU visitors looks increasingly self-defeating. It left Britain as the only major European country where international visitors cannot reclaim VAT.

The impact has been immediate and visible. In 2024 alone, more than £2bn of retail sales were lost to European competitors, with London’s West End suffering losses of £640m, up from £400m the year before.

The EU opportunity

Brexit also opened up a new possibility: extending VAT-free shopping to 450 million EU residents. The potential is clear from consumer behaviour. British travellers themselves spent £742m VAT-free in the EU in 2024, up fivefold from just £147m in 2021.

If extended here, AIR estimates this could unlock an additional £3.65bn in annual spending across the UK. The effect would ripple beyond retail, making Britain the first choice for global brands and investors in hospitality, leisure and culture.

The myth of cost

The main objection is cost. The Office for Budget Responsibility puts the fiscal impact of reinstating tax-free shopping at £2bn a year. But alternative modelling paints a different picture. Oxford Economics suggests the true net cost is closer to £590m, once higher visitor numbers and additional spending are taken into account. Global Blue analysis goes further, showing that every pound refunded can generate up to £1.90 in extra tax revenue.

Rather than draining the Exchequer, the evidence suggests that VAT-free shopping is a revenue generator.

Momentum for change

Business leaders and industry voices are increasingly aligned. More than 300 leaders from luxury and retail, including Walpole and Watches of Switzerland, have publicly urged the Government to act. The Culture Secretary has pledged to review the evidence, and the upcoming Visitor Economy Growth Plan provides a natural moment to take stock.

To support this push, AIR has launched the VAT-Free 2025 Campaign Hub, a resource bringing together data, guidance and contacts for those pressing the case.

What comes next

That is why Attis is partnering with AIR on a campaign through to November, focused on one clear goal: securing a Treasury review within the next twelve months. For the Government, this comes at no cost and no commitment. For Britain’s high streets, it offers the chance of billions in new spending, tens of thousands of jobs and renewed international competitiveness.

The opportunity is in front of us. The evidence is stronger than ever. And the timing is right.

Let the Chancellor know it is time to review tax-free shopping.

Paul Barnes is Managing Director of Attis and CEO of AIR