West End makes fresh calls for end to tourist tax ahead of ‘make or break’ festive period
West End leaders have made fresh calls for an end to the tourist tax as new analysis forecasts a £1.6bn festive spending boom largely driven by international shoppers.
The New West End Company has forecast spending over the festive season – from Black Friday to the Christmas period – to be higher than in the same period last year despite the continued cost of living crisis and its ongoing impact on domestic spending.
However, city officials are calling for VAT-free shopping to be reinstated to ensure foreigners don’t feel incentivised to ditch London and take their wallets to Paris or New York instead.
In 2020 then-chancellor Rishi Sunak scrapped the tax break on VAT products which saw international shoppers able to claim 20 per cent back on their purchases. It was largely popular with wealthy tourists who would travel to London to splurge on designer goods.
The ensuring additional 20 per cent has since been termed the ‘tourist tax’ and has been widely berated by retailers desperate to attract spending.
Dee Corsi, chief executive of the New West End Company, said the festive season is “more than just shopping” having helped the West End remain resilient through the ongoing cost of living challenges.
She added: “However, we cannot afford to ignore that it is international visitors driving our recovery this winter. To this end, we are calling on the government to conduct an independent evaluation of the impact of tax-free shopping.
“Christmas is a critical trading period for businesses both in the West End and across the UK, and the reinstatement of tax-free shopping is a simple measure that would put us back on an equal footing with other festive destinations in Continental Europe.”
Cllr Geoff Barraclough, Westminster City Council’s cabinet member for Place Shaping and Economic Development, said the upcoming months are considered a “make-or-break period”.
He added: “It’s clear that the buzz is back with international visitors returning in larger numbers and big names like HMV returning to Oxford Street. Whether you are coming from abroad or the UK, the West End is still an unbeatable destination for shopping, eating and going out.
“Working with our partners at New West End Company, we are going to build on this for an even stronger 2024 as we prepare to start work on the £90m overhaul of Oxford Street.”
Mayor of London Sadiq Khan said reinstating the VAT-free shopping scheme is an urgent matter: “This would not only help our retailers but also boost other sectors still struggling from the effects of the pandemic and the continuing cost-of-living crisis.”
A Treasury spokesperson said: “VAT-free shopping does not directly benefit Brits – it lets foreign tourists who buy items in the UK claim back VAT as they return home.
“The scheme could cost British taxpayers around £2bn a year, which is money we would need to find elsewhere to help fund. Furthermore, fewer than one in 10 non-EU visitors used the previous scheme, showing it’s not a significant attraction for tourists.”