UK to axe most duty-free sales, close VAT refund scheme

Get ready to pay full the sticker price on just about everything in the UK.

By David Flynn , September 16 2020
UK to axe most duty-free sales, close VAT refund scheme

The UK government will ban almost all duty free sales from January 1 2021, while also scrapping the VAT tax refund scheme for visitors.

The sole exception to the duty free clamp-down will be alcohol and tobacco, which will continue to be sold at British airports, international train stations and cruise terminals without the 20% VAT levy.

Additionally, Brits travelling to EU countries will be allowed to purchase duty-free alcohol and tobacco, “bringing our approach to the EU in line with the rest of the world” according the UK Treasury.

This is estimated to reduce the price of a standard (750ml) bottle of Champagne by close to £3, while a litre bottle of 40% ABV spirits will be £11.50 cheaper.

Alcohol escaped the Treasury axe as sweeping changes hit the duty free market.
Alcohol escaped the Treasury axe as sweeping changes hit the duty free market.

However, airport sales of all other duty free items – such as electronics, clothing, bags and fragrances – will be scrapped outright.

The Treasury said this decision was made “following concerns that the tax-concession is not always passed on to consumers in the airport. In some instances these tax-free goods are brought back into the country by UK residents, putting high street retailers at a disadvantage.”

This means that from January 1 2021 outbound travellers will now pay full retail price at the airport, which in turn is expected to deliver a major blow to many airport retailers.

Also for the chop: VAT refunds

Shopping before you get to the airport and then lining up to claim a refund against the 20% VAT will no longer be an option, with the at-airport VAT refund scheme being shelved.

“As part of these changes, VAT refunds for overseas visitors in British shops will be removed,” the Treasury confirmed, ending what it described as “the costly system of claiming VAT refunds on items they take home in their luggage.”

“Overseas visitors will still be able to buy items VAT-free in store and have them sent direct to their overseas addresses.”

As part of the changes, the personal alcohol and tobacco allowance for inbound travellers without paying UK import duties is also being significantly increased, and will apply to both EU and non-EU flights.

From January 1 2021 the revised allowances will encompass up to one case (nine litres) of sparkling wine, fortified wine or other “alcoholic beverage less than 22% ABV”; two cases (18 litres) of still wine; or four litres of spirits.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Qantas - Qantas Frequent Flyer

22 Jan 2015

Total posts 74

Just as well, the VAT refund process in the UK, and many parts of the world operated by third parties are a complete shambles of an offering anyways.. 30% service fee for a tax refund plus a 15% ForEx commission anyone? I guess it’s really hard work to scan those Global Blue receipt barcodes..

As much as we like to whinge about the long queue at TRS in Australia, it was (till ‘Rona happened) a much better outcome for consumers.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 327

Totally agree.  Not even Mick Gatto would charge that much !!!

Don’t think the inbound allowance for tobacco is increasing is it? Was always 200 cigs/250g tobacco and/or x amount of cigarillos/cigars, afaik.

03 Jan 2012

Total posts 95

I could always buy a full price bottle of Single Malt at any bottleshop in Perth and it would still be cheaper than duty-free Scotch purchased at Heathrow. So not much change for my shopping habits I expect!

Qantas - Qantas Frequent Flyer

19 Jul 2017

Total posts 14

I couldn't be bothered to join the queue for the refunds anyway particularly if for a fairly small amount. Guess this also makes things easier for Australian customs as you either pay 20% VAT and cant get it back or pay cost of shipping plus 10% GST if you want it here and is above the threshold.

Qantas - Qantas Frequent Flyer

12 Jan 2017

Total posts 12

"In some instances these tax-free goods are brought back into the country by UK residents, putting high street retailers at a disadvantage.”

Umm, actually no. The non-booze retailers (and they are normally high street retailers as well) are still getting the same revenue, it's just the UK government wasn't getting their VAT cut. 

The leaving of the European customs union at the end of December should mean the duty free stores would become fully duty free - removing the quasi tax free pricing that occurs when flying to an EU or domestic location. The whole process should be easier, this is just a tax grab to partially offset the current deficit.

However, earlier comments are correct. Sale prices at the supermarket or on Amazon are normally cheaper than the duty free price - or pick up your booze at a Spanish airport, as it's dirt cheap there.

It will be the 1 litre limit from EU countries that will be the big difference. As part of the EU, we are able to bring in non-commercial quantities. No more day trips across the channel to load up the car with Belgian beer and French wine.

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