In a recent statement, financial secretary Nigel Huddleston cautioned that it is unlikely for a reversal on the so-called “tourist tax” to be announced in the upcoming spring Budget.
Huddleston, who oversees the tax system, explained in a letter shared with The Times that reinstating the previous system is not feasible due to the need for it to be applicable to visitors from both the EU and the rest of the world.
He emphasized that any new scheme, regardless of its structure, would require legislative measures and implementation time to mitigate non-compliance risks and ensure effectiveness, responding to a correspondent involved in the tourist tax advocacy.
Huddleston noted that “the Chancellor emphasizes fiscal responsibility as a top priority,” indicating that a new VAT-free shopping initiative could already subsidize a significant portion of tourist expenditures that currently exist without tax relief, without offering direct benefits to the public.
These statements were made amid aspirations from retail industry leaders and advocates for Huddleston to reintroduce the benefit for international visitors in the next budget, following his request to the Office for Budget Responsibility (OBR) to assess the possibility of reversing the decision to eliminate it.
The New West End Company and the Association of International Retail (AIR) recently provided evidence to Downing Street challenging the Treasury’s estimate that reintroducing the tax relief would result in £2.5 billion in lost tax revenue.
