Absence of tax-free shopping costing UK businesses

West End retailers in London lost 310 million pounds in retail sales in the first half of 2025 due to the absence of tax-free shopping, up 40 percent from 220 million pounds in H1 2024, marking the largest loss across the half year since the policy was removed.

The research from the New West End Company, which represents both property and occupier businesses on Oxford Street, Regent Street, and Bond Street, states that cumulatively, since the start of 2023, the lack of tax-free shopping in the city puts the cost of unrealised sales for businesses in the area at nearly 1.4 billion pounds.

Eight in ten (83 percent) of West End businesses say the lack of tax-free shopping is directly “damaging trading performance,” with 92 percent reporting seeing lower international spend, while 81 percent are seeing fewer international visitors.

Of those surveyed, 96 percent believe that potential international spend in the West End is being diverted to cities like Paris and Milan.

Other concerns for West End businesses include rising operational costs and shifting consumer patterns, with 75 percent adding that they are reviewing staffing levels and 50 percent are rethinking investment in the UK.

This is despite continued growth of travel and shopping globally, with the World Travel and Tourism Council (WTTC) forecasting that worldwide international visitor spend is set to reach 2.1 trillion US dollars in 2025, surpassing previous highs in 2019 by 164 billion US dollars.

Dee Corsi, chief executive of New West End Company, said in a statement: “The data is clear: losing tax-free shopping is costing UK businesses, with the value of unrealised sales growing year-by-year. And with the high cost of doing business in the UK compounding the pressure, many businesses are being forced to review their staffing or investment decisions.

“But it doesn’t have to be that way. Tax-free shopping presents a rare, low-cost opportunity for the Government to back Britain’s near-term growth, create jobs, and give our businesses their competitive edge once more. Not only is the scheme understood by global consumers, backed by business. The time to act is now, before the window of opportunity closes.”