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.
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.