Tax-free shopping for tourists in UK may return as government eyes rethink

The UK government is considering reinstating tax-free shopping for tourists as it assesses the impact of its 2020 cancellation.

The Office for Budget Responsibility (OBR) will analyze the financial implications of the decision, originally made by former Chancellor Rishi Sunak, which faced criticism for reducing tourists and harming sales. The review's findings will be released with the upcoming budget.

Retailers and leisure companies have argued that ending the scheme was a mistake that cost the economy billions and discouraged tourists. An industry-backed report claims the UK loses £10.7 billion annually and 2 million tourists due to the policy.

Critics, including fashion brand Burberry's chair Gerry Murphy, have labeled the decision as damaging to both businesses and jobs, especially during economic strains.

A new campaign supported by Heathrow airport and business groups is urging the government to eliminate the "tourist tax." They highlight that international visitors face 20% higher prices without the tax break, putting UK businesses at a disadvantage compared to European counterparts.

The Treasury is reviewing the system but maintains that tax-free purchases are still an option for non-UK visitors shipping goods directly abroad. They also announced a £4.3 billion support package for businesses to bolster the high street.