Britain is bringing back VAT-free shopping for overseas visitors — including British expats — to boost its flagging retail sector, Chancellor of the Exchequer Kwasi Kwarteng said on Friday.
Kwarteng told Parliament the government would also replace the previous paper-based system with a digital one as soon as possible.
It is welcome news for British expats living in the Gulf who, along with foreign visitors, will be able to claim the value added tax they pay during visits home before they leave the country — as long as they can prove they live abroad.
“This is excellent news. It will make shopping so much cheaper when I go home,” said British expat Lucy Land, who lives in Saudi Arabia.
“Hopefully the new digital claim system the chancellor has announced will make the process easier. I was always put off before by the paperwork.”
But she said she did have some concerns.
“While it is welcome news — every penny counts these days — I do wonder how the government will be able to pay for the many services the state provides. Something will surely have to give?”
British expats pay hundreds of pounds in VAT during their trips back to the country. Costs stack up with evenings spent in restaurants with old friends and family, or shopping for those prized items not available in their host nation.
“It’s good news. I spend a fortune when I go home. So being able to claim some of that back is going to help a lot, because VAT is a lot in Britain,” said British expat Robbie Jones, who lives in Dubai.
“The cost of living crisis has hit us all, so it will be nice to be able to have fraction-less outgoings and I think this will be great news for British retailers who have felt the pinch as people spend less.”
Visitors to the country used to be able to claim back the tax they paid on shopping at the airport or rebate agencies before leaving the country.
But the rebate was scrapped on Dec. 21, 2020 by the then chancellor, Rishi Sunak.
“Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centers to feel the economic benefit. So we have decided to introduce VAT-free shopping for overseas visitors,” Kwasi Kwarteng told Parliament during the presentation of a mini-budget.
Linda Ellett, KPMG’s UK head of consumer markets, retail and leisure, said the move would increase the UK’s competitiveness when it comes to attracting international visitors.
“This is all the more key as we look to find ways to create economic growth, return international tourism to pre-pandemic volumes, and withstand rising inflation on the high street,” she said.