In wake of tariffs: UK fashion and retail band together on call for VAT-free shopping

A new letter issued to Rachel Reeves, is calling on the UK Chancellor to consider reinstating a tax-free shopping scheme as concerns mount over tariffs. The letter, seen by FashionUnited, was signed by the CEOs of Walpole, the British Retail Consortium (BRC), the British Beauty Council and the British Fashion Council (BFC), each representing certain sectors of the UK business.

In it, the organisations note that new tariffs “profoundly impact [the UK’s] export businesses”, leading to some companies withdrawing from the US market, cancelling orders or experiencing a lack of US consumer confidence and change in behaviour. Further evidence suggests many UK businesses may face negative impact to profitability.

There is also concern surrounding the uptick in business costs following the implementation of the government’s Budget, such as the increase to National Insurance Contributions and National Living Wage.

“The government must end the UK’s uncompetitive position…”

As such, the executives stated that it was an "opportune moment to introduce a tax-free shopping scheme for international visitors to the UK”, in an effort to boost growth and economic opportunities. “In today’s volatile global economy, the UK cannot afford to forgo the substantial benefits that tax-free shopping brings,” the letter later continued.

The organisations point to a report by VisitBritain that suggests British shops alone are estimated to lose 1.5 billion pounds annually to international visitors opting to shop in EU countries, where tax-free shopping serves as an incentive.

In a statement to FashionUnited, Helen Dickinson, chief executive of the BRC, said: “The government must end the UK’s uncompetitive position as the only European destination without tax-free shopping. Many tourists are turning away from the UK, meaning British businesses are losing out on a huge opportunity, particularly as more Americans choose to shop abroad to avoid tariffs at home.

“A tax-free shopping scheme for international visitors would pay for itself: for every one pound spent by high-value visitors, eight pounds flows into the wider economy, benefitting retail, hospitality, and leisure, and creating employment opportunities and boosting economic growth across the country.”