Exports: VAT

(asked on 18th September 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the value of tax-free shopping sales in the UK; and what proportion of that spending is forecast to be retained in the UK once the VAT retail export scheme is withdrawn.


Answered by
Kemi Badenoch Portrait
Kemi Badenoch
President of the Board of Trade
This question was answered on 28th September 2020

The Government has announced that the VAT Retail Export Scheme will not be extended to EU visitors, and will be withdrawn for all non-EU visitors, following the end of the transition period. However, retailers will continue to be able to offer VAT-free shopping to non-EU visitors who purchase items in store and have them sent direct to their overseas addresses and this will be available to EU visitors following the end of the transition period.

The final costing will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.

The Government recognises the challenge these businesses face. The Chancellor announced the Winter Economy Plan on 24 September. This includes an extension to the temporary 5 per cent reduced rate of VAT on goods and services supplied by the tourism and hospitality sectors from 12 January to 31 March 2021. This alone provides continued support for the cash flow and viability of over 150,000 businesses and protection for 2.4 million jobs in the tourism and hospitality sectors. The plan also provides further support to businesses and jobs over the coming months.

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