Reintroducing tax-free shopping for overseas visitors would generate £11.5 billion in additional economic output, support more than 153,000 jobs across the UK and deliver a £2.6 billion net gain to the Treasury, according to a new report from the Centre for Economics and Business Research.
The economic consultancy said restoring the VAT refund scheme for international visitors would attract up to 2.35 million more tourists to the UK each year and generate an additional £4.1 billion in spending, providing what it described as a substantial boost to growth, employment and tax revenues across the country.
The scheme was scrapped in 2021 by the Conservative government. HMRC confirmed the withdrawal of the VAT Retail Export Scheme from Great Britain with effect from 1 January 2021, alongside the end of airside tax-free shopping.
The report, commissioned by Heart of London Business Alliance, found that while international visitor numbers have broadly recovered since the Covid pandemic, visitor spending has lagged significantly behind. Overseas visits in 2024 were only 1.3 per cent below 2019 levels, but real visitor expenditure remained 8.7 per cent lower than before the pandemic. Average spending per visit fell to £786 from £848.
The Office for National Statistics estimates that overseas residents made 42.6 million visits to the UK in 2024 and spent £32.5 billion.
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