Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Businesses urge Rachel Reeves to restore tax-free shopping as US tariffs hit UK exports

by May 19, 2025
May 19, 2025
Businesses urge Rachel Reeves to restore tax-free shopping as US tariffs hit UK exports

Britain’s leading retail, luxury, and fashion groups are calling on Chancellor Rachel Reeves to reinstate tax-free shopping for international visitors, warning that mounting pressure from US tariffs is eroding UK competitiveness and forcing businesses to scale back transatlantic operations.

In a joint letter four major trade bodies — the British Retail Consortium, British Beauty Council, British Fashion Council, and Walpole, which represents UK luxury brands — urged the Treasury to act swiftly. Their message: restoring VAT-free shopping is not a luxury, but a “proven growth strategy” needed to help the UK economy weather worsening global trade disruption.

“US tariffs will negatively impact our businesses’ profitability,” the organisations wrote. “We are considering how we, as associations, and the UK government could best support businesses at this time.”

The plea comes amid rising concern over the economic fallout from President Trump’s trade policies, which have seen tariffs imposed on a range of UK goods. British businesses in fashion, beauty and luxury sectors are reporting falling demand from American buyers, rising pressure to reduce wholesale prices, and order cancellations.

Some UK companies have already reduced exposure to the US market, while others report a shift in American consumer behaviour — opting to travel abroad for luxury purchases rather than pay higher prices at home. But with the UK no longer offering tax-free shopping, those dollars are increasingly being spent in Paris, Milan and Madrid, where tourists can still reclaim VAT on purchases.

A missed opportunity for British business?

Tax-free shopping for tourists was scrapped in 2021 following Brexit, despite widespread opposition from business groups. The policy had allowed international visitors to reclaim the 20% VAT on purchases made in the UK, providing a crucial incentive for high-spending tourists.

The industry argues that removing the scheme has made the UK less competitive as a shopping destination — just as other European cities double down on tax rebate schemes to attract global consumers.

“Introducing this policy is not a luxury,” the letter stated. “It is a proven growth strategy.”

According to Bain & Company, for every £1 spent by high-value tourists, £8 flows into the wider UK economy, with affluent international travellers spending 14 times more than the average visitor. Over half of their spending typically goes to shopping, culture, and entertainment — sectors under increasing strain from reduced international trade and falling visitor numbers.

VisitBritain forecasts that tourist spending in 2024 will remain nearly 10% below pre-pandemic levels, a worrying trend for a sector vital to the UK’s high streets and hospitality industries. Trade groups say the loss of tax-free shopping has compounded this shortfall, contributing to downsizing, weaker supply chains, and declining revenues across multiple sectors.

As chancellor, Jeremy Hunt previously commissioned a review of the scheme by the Office for Budget Responsibility (OBR). Although the review followed hundreds of calls from business leaders, Hunt opted not to reverse the decision, citing OBR estimates that scrapping the scheme would save £540 million per year by 2025-26, and reinstating it could cost up to £2 billion.

A Treasury spokesperson reiterated this stance on Thursday: “We have no plans to introduce a new tax-free shopping scheme in Great Britain. Visitors can continue to claim VAT relief where the items purchased are shipped directly to their home country as exports.”

But with British exporters under pressure from tariffs and international shoppers turning to European rivals, industry leaders believe the cost of inaction may far outweigh the savings.

As Chancellor Reeves weighs her first major economic decisions, the restoration of tax-free shopping may become an early test of her commitment to supporting UK exporters, revitalising the high street, and retaining Britain’s global retail appeal.

Read more:
Businesses urge Rachel Reeves to restore tax-free shopping as US tariffs hit UK exports

0
FacebookTwitterGoogle +Pinterest
previous post
Rich List tycoons warn Reeves that tax plans threaten family firms and UK wealth creation
next post
‘HMRC won’t speak to us’: exporters frustrated by post-Brexit border checks and red tape

You may also like

BGC survey forecasts £2.7 billion wagered each year...

May 1, 2025

Build to last: 25-year-old SaaS giant, Netcore Cloud...

October 3, 2022

The Peter Jones Foundation and FRP join forces...

May 12, 2025

UK SMEs fear ‘cliff-edge’ energy bills in April,...

November 14, 2022

Clouds of flavour: the diverse tastes of the...

February 7, 2024

UK SMEs feel let down by ‘entrepreneur’ chancellor

March 6, 2024

GOV.UK Forms to streamline public access to government...

November 4, 2024

The last stop before you’re ready for media...

August 26, 2022

Scottish Woman Sues Netflix for $170M Over Baby...

June 7, 2024

Services sector shrinks for first time since lockdown

November 4, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump’s tough policies push UK, EU to significantly expand trade and defense

      May 19, 2025
    • Swiss-born liberal megadonor slapped with lawsuit for allegedly groping, sexually harassing winery employee

      May 19, 2025
    • Walz ripped for ‘sickening’ use of Nazi-era language describing Trump’s immigration policy: ‘Anti-American’

      May 19, 2025
    • Trump-pardoned real estate mogul Charles Kushner up for key diplomatic post

      May 19, 2025
    • New Shipping Fees and Requirements Pose Fresh Threat to US Economy

      May 19, 2025
    • 50+ Venezuelans Imprisoned in El Salvador Came to US Legally, Never Violated Immigration Law

      May 19, 2025

    Categories

    • Business (7,990)
    • Investing (1,968)
    • Politics (15,297)
    • Stocks (3,091)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved