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Thousands of tourists ditch UK to shop in other parts of Europe with no VAT fees as retailers urge Government to scrap hated tourist tax

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  • Research shows scrapping tourist tax could make the UK £10bn a year better off

Thousands of tourists who previously shopped tax-free in Britain are now heading to Paris, Milan and Madrid instead, a study shows.

The revelation comes after Selfridges announced a new round of redundancies, blaming the hated ‘tourist tax’ for falling sales at its stores.

Analysis shows 162,000 visitors from outside the European Union sought refunds on VAT exclusively in the UK in 2019, a year before the scheme was ended.

A fifth of these visitors now claim rebates in EU countries, where the tax break still applies. 

France and Italy are the biggest beneficiaries, accounting for more than two-thirds of the swing. 

Thousands of tourists who previously shopped tax-free in Britain are now heading to Paris and Madrid instead, a study shows (Stock image)

Chancellor of the Exchequer Jeremy Hunt visits a Morrisons store in London on April 29, 2024

Chancellor of the Exchequer Jeremy Hunt visits a Morrisons store in London on April 29, 2024 

Tourists are also flocking to Milan to shop tax-free, with historic malls, such as the one pictured, attracting hundreds of visitors

Tourists are also flocking to Milan to shop tax-free, with historic malls, such as the one pictured, attracting hundreds of visitors

Spain has also benefited, according to the research by Swiss tax rebate provider Global Blue.

The figures will put more pressure on Chancellor Jeremy Hunt to bring back the refund scheme, which was abandoned in a post-Brexit bonfire.

Marks & Spencer, Harrods and Heathrow are among more than 500 major businesses backing the Daily Mail’s campaign for the Government to Scrap the Tourist Tax. 

In 2020, then chancellor Rishi Sunak abolished rules which let tourists from outside the EU claim back VAT on purchases – making them 20 per cent more expensive.

Research last year suggested scrapping the tourist tax could make the UK £10billion a year better off.

Ministers have tried to dismiss business leaders’ fears by arguing tax-free shopping benefits only luxury brands and the wealthiest tourists. 

But retailers argue tourist spending supports jobs across the country.

Selfridges boss Andrew Keith this week blamed 70 redundancies on the end of VAT-free shopping, telling staff it ‘has significantly impacted international sales’. 

Russell Nathan, of accountants HW Fisher, said: ‘It’s time for the Chancellor to bring back VAT-free shopping and put the UK back on the map as one of the world’s go-to shopping destinations.’

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