The UK could see a £5 billion Brexit boost if the controversial ‘tourist tax’ is scrapped, analysis finds

Scrapping the ‘tourist tax’ could unlock a Brexit boost, with Europeans spending £5.1billion on tax-free shopping in the UK, analysis suggests.

More than 300 business leaders have backed a Mail campaign to bring back the VAT exemption for foreign visitors, arguing it would encourage tourists to visit the UK.

Before the initiative was axed in 2021, tourists from outside the EU could receive a 20 per cent refund on purchases in the UK.

Now the UK has left the EU and its customs union, EU residents would be able to shop tax-free alongside high-spenders from China and the US if the VAT exemption was restored. 

Michael Ward, chief executive of Harrods, has warned that it has to ‘run three times as fast’ as rivals to entice Chinese shoppers to return to the UK

Paul Barnes, chief executive of the Association for International Retail, said: ‘Britain is currently missing out on a post-Brexit boom as it would become the only major country in Europe where 450million EU residents could spend tax-free.’

AIR estimates Europeans would spend £5.1billion on tax-free shopping per year – in addition to ‘knock-on’ spending at hotels and restaurants.

The trade body says a Treasury estimate that there would be up to 50,000 extra EU visitors if tax-free shopping was reintroduced is a fraction of the potential figure, with latest data from Europe putting the number who would make tax-free reclaims at around 2.3million.

Dee Corsi, chief executive of the New West End Company, which represents 600 firms across Bond Street, Oxford Street and Regent Street, said: ‘Extending tax-free shopping to EU residents is the Brexit bonus that never was.

‘The U.K. would have been the largest tax-free shopping destination for 450 million Europeans, but instead we are squandering a lucrative opportunity to court our closest neighbours.

‘This would more than compensate for the net leakage of British spend across the Channel, as more British shoppers enjoy the post-Brexit perks of tax-free shopping on the Continent.

‘Reinstating tax-free shopping would open up a huge new tourism market which would benefit not only our retailers, but businesses across the entire ecosystem, from hotels and leisure to cultural attractions.’