Five years on from the demise of VAT-free shopping, retail and hospitality chiefs say the impact is still causing pain as the industry seeks change, writes Joanna Hodgson

Five years ago this month a change came in that might, on the surface , have prompted the average British shopper to get their smallest violins out: overseas visitors would have fewer incentives to buy designer goods in the UK.

Once a hugely popular perk, the ability for non-EU visitors to reclaim 20 per cent VAT on purchases ended under the Conservative government in January 2021 after Britain departed the bloc. Since then, a growing chorus of chief executives from upmarket retail and hospitality firms have sounded the alarm over how significant this decision to scrap VAT-free shopping was.

Paul Barnes, who leads industry body the Association of International Retail (AIR) says the return of tax-free shopping would provide a big boost to the UK economy. “It is one of the most important issues for tourism and Britain’s high streets.”

Now, with half a decade passed and no reprieve for the many companies that have called for the reinstatement of tax-free shopping, Barnes is making a fresh plea to the government for a review. At the same time a host of bosses today tell City AM the impact of the so-called ‘tourist tax’ is still very much visible, adding to other challenges in 2026.

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