Tories pledge to bring back tax-free shopping for tourists

**Tories pledge to restore tax-free shopping for tourists**

The Conservative Party has promised to reinstate tax-free shopping for tourists arriving from outside the European Union.

The Tories said ending the scheme in 2021 made the UK less competitive than European destinations.

Party leader Kemi Badenoch, who was a Treasury minister when the tax relief was removed, said businesses were being "let down by a tax policy that is chasing their customers away".

Labour, meanwhile, accused the Conservatives of "a spectacular U-turn".

The VAT Retail Export Scheme — which let overseas visitors claim a VAT refund on goods bought in Great Britain and taken home in their luggage — was abolished for non-EU visitors under the previous Conservative government in 2021, and it was also not extended to EU visitors.

At the time, Badenoch said it was "a costly relief which does not benefit the whole of GB equally".

The Conservatives have now unveiled plans to bring back VAT refunds for eligible visitors from outside the EU.

The party said that if evidence shows the scheme "pays its way", it would be extended to EU visitors by the end of the next Parliament.

It said the cost of restoring the scheme would be covered by tougher action on "NHS health tourism", including more consistent charging of patients who are not eligible for free treatment, minimum recovery targets for debts, and a requirement that debts be fully repaid before visa applications or renewals are considered.

Any remaining costs would be met from a package of savings announced by the Tories last year.

The party also said the policy would help shops, hotels, restaurants and the wider tourism sector.

It cited research from the Centre for Economics and Business Research (Cebr), which suggested that fully restoring tax-free shopping for tourists could bring in up to 2.35 million additional visitors and create £4.1bn in extra spending.

That report, published earlier this month, also estimated that every £1 of VAT refunded could generate £1.54 in other taxes.

Badenoch said: "We have iconic retailers, inventive designers and brilliant manufacturers, but they are being let down by a tax policy that is chasing their customers away.

"Holidaymakers are choosing rival cities in other countries for the simple reason that it saves them money."

Businesses have long urged the return of tax-free shopping for tourists, saying they are at a disadvantage compared with other European countries.

EU countries provide VAT refunds for non-EU visitors, while other European countries such as Switzerland have similar arrangements.

Helen Dickinson, chief executive at the British Retail Consortium, said: "Introducing a modern tax-free shopping scheme would help attract more international spending to the UK, supporting high streets, jobs and investment in towns and cities across the country.

"Done properly, it would boost economic growth and deliver a net benefit to the Exchequer."

But a Labour spokesperson said: "Kemi Badenoch used to say tax-free shopping was a costly giveaway and now she's trying to sell it as an economic miracle.

"If they really think it's such a great idea, they should explain why they scrapped it in the first place and how they'd pay for bringing it back."