Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment HMRC has made of the potential merits of introducing arrivals duty free shops in airports, international rail and ferry terminals in Great Britain.

Following a consultation, the Government announced on 11 September 2020 that duty-free sales would be extended to EU-bound passengers for the first time in over 20 years from 1 January 2021.

This is a significant boost to all airports and international rail terminals in England, Scotland and Wales, including Manchester, and smaller regional airports and rail hubs, which have not been able to offer duty-free to the EU before.

Duty-free on arrival did not form part of the Government's consultation on the potential approach to duty- and tax-free goods arising from the UK’s new relationship with the EU, which took place in the Spring of 2020. The Government nonetheless acknowledged in the summary of responses to the consultation that some stakeholders had requested the introduction of duty-free on arrival. This also set out that duty-free on arrival was not a scheme that the Government previously offered and was therefore not considering implementing the scheme at that time.

Duty-free on arrival could undermine the UK high street and run counter to public health objectives. The Government would also need to consider the cost and any revenue and legal risks of introducing such a scheme. Any new tax relief will impose additional pressure on the public finances, to which excise duty makes a significant contribution. Duty on alcohol and tobacco raises over £22 billion and plays a key role in funding vital public services like the NHS and addressing harms caused by these products. Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing or increased taxation elsewhere.