Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of the withdrawal of tax-free shopping for passengers travelling to non-EU destinations on spending by non-EU international visitors since 1 January 2021; and what data his Department holds on spending by non-EU international visitors (a) in each of the five years before and (b) since 1 January 2021 in (i) France and (ii) Italy.

The Chancellor announced on 17 October 2022 that the Government will not be proceeding with plans to introduce a new VAT-free shopping scheme.

Introducing VAT-free shopping would come at a significant fiscal cost as it would subsidise a large amount of tourist spending which already occurs without a tax relief in place.

The independent Office of Budget Responsibility published their assessment of the withdrawal of the previous VAT-free shopping schemes in November 2020. This showed that the withdrawal of VAT-free shopping would raise a significant amount of revenue and have a limited behavioural effect on decisions to visit, or spend, in the UK.