British shoppers are increasingly turning to VAT-free shopping in the EU, with spending surging to £742m last year — more than five times the £147m recorded in 2021, according to data from the Association of International Retail (AIR).
This sharp rise follows the UK government’s 2021 decision to scrap its VAT-free shopping scheme for international visitors, coinciding with EU countries introducing VAT refunds for British travellers.
The Times reports that spending in the first 22 weeks of 2025 has already grown 16% compared with the same period last year.
AIR says British consumers have become savvy in exploiting tax-free incentives abroad, often travelling overseas to make large purchases rather than shopping domestically.
France leads as the top EU destination for VAT-free shopping by Britons, with Paris alone accounting for 75% of spending in the country.
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The surge in overseas tax-free spending has reignited calls for the UK to reinstate its own VAT-free shopping scheme, which would help reverse lost retail trade and tourism revenue.
More than 500 business leaders, including executives from Burberry and Primark, have urged the government to act, warning that current policies are damaging the UK’s global retail competitiveness.
Derrick Hardman, chairman of AIR, said: “It makes no sense for the UK to remain the only destination in Europe not offering tax-free shopping.
“Reintroducing a tax-free scheme would more than pay for itself, benefiting retail as well as hotels, restaurants, and entertainment.”
However, the UK Treasury has reiterated there are no plans to bring back the scheme, noting that visitors can still claim VAT relief on goods shipped directly to their home countries.
Meanwhile, major trade bodies have recently called on shadow chancellor Rachel Reeves to push for reinstatement, citing growing pressure from rising US tariffs and weakening consumer demand.
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