The Government has announced significant changes to duty-free shopping from January 1 next year.
Tax-free airport sales on the likes of perfumes and cameras will soon be scrapped, though British travellers will be able to take advantage of a new concession on alcohol and tobacco when travelling to EU countries.
Meanwhile, the personal allowance of certain goods being brought back to the country will be upped and VAT refund arrangements for overseas visitors altered. Until the Irish border and custom puzzle is resolved, Northern Ireland will continue with the existing duty arrangements
The new legislation is part of a drive to align the treatment of EU and non-EU travellers as the country moves out of the Brexit transition phase. Here we break down what the new rules will mean for passengers.
Has duty-free shopping been scrapped?
In a bold move, tax-free shopping at airports, ports and Eurostar stations will be removed for all products other than alcohol and cigarettes. This means that outbound passengers will no longer benefit from discounts on airport favourites such as electronic goods, beauty products and oversized chocolate bars.
Duty-free is shopping at airports exempt from duty or VAT, currently set at 20 per cent. Since 1999, the saving has only been available to passengers flying outside of the EU, although there were previously rumours that it might be extended to EU travellers post-Brexit.
The Treasury confirmed the news it would be ended, stating that there have been “concerns that the tax-concession is not always passed on to consumers in the airport”, with retailers hiking up prices to increase profit margins.
It also argued that “in some instances these tax-free goods are brought back into the country by UK residents, putting high street retailers at a disadvantage.”
Previous research conducted by online travel agency, eDreams, suggested that British holidaymakers have lost faith in the value of duty-free shopping, with only 6 per cent believing it offers the best price.
Some in the beleaguered travel industry are urging the Government to reconsider the plans. Karen Dee, chief executive of The Airport Operators Association (AOA), described the move as a “hammer-blow” and said it showed “a complete lack of awareness for the jobs and businesses on the line in the aviation sector.”
She explained: “By removing the airside concession, the Government is needlessly harming the revenue of retailers and airports. Passengers will be dis-incentivised from making purchases as they travel.
“Many foreign visitors will now choose to go elsewhere, attracted by the tax and excise regimes of our European competitors. This will harm not only UK airports, but the high street stores that hugely benefit from tourists.”
What are the new rules surrounding alcohol?
The Government has confirmed that from next year British passengers travelling to EU countries will be able to buy duty-free alcohol and tobacco products, in airports, ports and international train stations, plus aboard ships, trains and planes. It remains to be seen whether airlines and airport operators will pass on these new savings on to customers, but they could be hesitant given the previous concerns over excessive airport drinking.
As expected, travellers arriving from the EU will no longer be able to bring back unlimited amounts of alcohol without declaring it and paying duties, signalling the end of the Calais ‘booze cruise’ phenomenon, where Britons would fill their cars with French wine and return home with no customs concerns.
However, perhaps to temper disappointment, the amount that passengers can bring back with them from non-EU countries will be significantly increased, and extended to EU countries, with the Treasury stating it will provide “one of the most generous allowances anywhere in the world.”
In practice, this means that passengers travelling from any country will be able to bring back 42 litres of beer, 18 litres of still wine, plus four litres of spirit or nine litres of sparkling wine without paying UK duties.
The rules regarding tobacco products and other goods will remain the same.
Are there any other changes to customs arrangements?
In a move less relevant to British travellers, but one that still marks a significant shift, VAT rebates for overseas visitors in UK shops will also be withdrawn at the start of next year.
The Treasury argued that “the scheme is a costly relief which does not benefit the whole of Britain equally, with current use largely centred in London.”
However, tourists will still be able to buy items VAT-free in store if they have them sent directly to their overseas addresses.