Axe tourist tax to draw in US buyers, retailers tell Chancellor

Published on: March 9, 2025

By EMILY HAWKINS AND ANNE ASHWORTH

Updated: 21:50 GMT, 9 March 2025

Pressure is mounting on the Chancellor to end the ‘tourist tax’ so that London and other locations can attract American luxury goods lovers eager to swerve higher prices that could result from Trump’s tariffs in their homeland.

Renewed calls for the reform are coming from the tailor to King Charles and representatives of the major retailers.

The move – which would restore VAT-free shopping for visitors from overseas – would provide a fillip to hotels and stores in London and other locations that sell British labels like Burberry, but other luxury brands from Europe and elsewhere.

Anda Rowland, director of royal suit maker Anderson & Sheppard in Savile Row, said: ‘If Rachel Reeves is serious about pulling every lever to stimulate economic growth, she should immediately reintroduce tax-free shopping for international visitors which was available for decades and drove huge amounts of tourist trade.’

Paul Alger, international business director of the UK Fashion and Textile Association, said higher prices in America would mean ‘US consumers will be more willing to travel abroad to catch a bargain.’

Alger fears that American tourists will start their European jaunt in Britain which tends to be the routine.

In need of a boost: VAT-free shopping for visitors from overseas would provide a fillip to hotels and stores in London and other locations that sell British labels like Burberry

But to avoid more expensive prices – tariffs on European goods could be as high as 25 per cent – they will prefer to buy bags, clothing, jewellery and watches in Europe, where they offer concessions to tourist shoppers. France and Italy will be eager to press their advantage.

The Treasury’s past stubbornness over this issue is the reason why the tourist tax has not been repealed.

Since 2021, the UK has suffered £11billion-a-year in lost revenues, according to calculations from the influential CEBR consultancy.

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Axe tourist tax to draw in US buyers, retailers tell Chancellor

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Axe tourist tax to draw in US buyers, retailers tell Chancellor