The UK's Value Added Tax (VAT), contained in the advertised price of most goods and services is currently at a whopping 20%. But if you're thinking of doing some shopping in London with the strong Australian dollar, remember that you can claim back the VAT on many types of goods.
The process varies between retailers, so there's no hard and fast rules for how it all works.
Fortunately, HM Revenue and Customs, the UK tax man, has provided a useful guide for claiming VAT refunds under the VAT Refund Scheme.
Australian Business Traveller's top tips for the refund process include:
- check carefully that your intended purchase and shop are eligible and participating in the scheme, and make sure you and the retailer know how you'll be refunded
- bring your passport when you go shopping to prove you are eligible for a refund
- arrive at the airport early to go through the procedures, which can involve a good deal of waiting
- don't forget that you claim the VAT refund as you leave the EU, so if your goods are flying via another EU country you'll need to figure out how that process works
- remember not to check in for your flight before customs officers have inspected the items you're carrying
In general, most items that are purchased and then removed from the EU are eligible, while services (hotels, car rental, food) are not. Still, we know there are bargains to be found in the UK...and not just on British Cadbury's chocolate.
Of course, there are bargains to be had -- a 20% VAT rate is still lower than many other EU countries -- it's a massive 25% in Denmark, Sweden and Hungary. The lowest country-wide rate is in Cyprus at 15%, although on Spain's Canary Islands it's just 5%. ¡Vamos de compras!
Making matters a little more difficult for bargain-hunters, Australian Business Traveller's UK contacts report that many retailers are taking the opportunity to raise their prices by more than 2.5%.