Bring back duty-free perk to boost London - mayor

The mayor of London has called on the chancellor to reinstate duty-free shopping for overseas visitors and extend it to EU visitors.

The capital has been disadvantaged by the end of the perk said the bosses of Heathrow, Selfridges and Harrods. 

Sadiq Khan said it would provide a "much-needed boost" to the capital's retail sector.

An HM Treasury spokesperson said the chancellor was prioritising being "responsible" with public finances.

Before Brexit in 2020, international visitors could receive a VAT refund on items bought in High Street shops, at airports or other departure points from the UK which they exported in personal luggage.

It was set to return as part of Kwasi Kwarteng's "mini-Budget" but dropped by Chancellor Jeremy Hunt when he took up the post last year.

Mr Khan co-signed a letter on 31 January to the chancellor in which he said that reinstating duty-free shopping would help London's retail and hospitality sectors "at a time they need it most".

"Our rich ecosystem of shops, hospitality venues, and cultural attractions, is heavily dependent on both domestic and international tourists," Mr Khan wrote.

Steve Medway, CEO of the Knightsbridge and King's Road Partnerships, representing over 500 businesses in the Kensington and Chelsea area, including major signatories to the letter, called on the chancellor to "see reason".

"The withdrawal of tax-free shopping puts London as an international tourist destination at a disadvantage," he said. 

He highlighted that shoppers from China would receive the tax reduction "if they choose Paris or Milan instead of London".

Kay Buxton, chief executive of Marble Arch London BID, which signed the letter, claimed research showed that reinstating duty-free shopping could add £3bn to the UK economy.

An HM Treasury spokesperson said the chancellor was prioritising being "responsible" with public finances.

They said: "Introducing a wide-ranging VAT-free shopping scheme would come at too high of a cost, as has been supported by previous estimates from the Office for Budget Responsibility."

Tax-free shopping is available to all non-UK visitors who purchase items in store and have them sent directly to their overseas address.