UK Treasury confirms return of duty free sales to EU-bound travellers but axes tax free sales on other categories

UK. Travellers departing the UK for EU countries will be able to purchase duty free goods from 1 January 2021, the government confirmed today. But it also announced that tax free sales will be withdrawn for all outbound passengers from 1 January 2021 on goods other than liquor & tobacco.

The return to a duty free regime, said the UK Treasury in a statement, would “bring our approach to the EU in line with the rest of the world.” As reported, the UK will be treated as a ‘third country’ once the transition period for its departure from the EU ends on 31 December.

The Treasury explained that passengers will be able to buy duty free alcohol and tobacco products, where available, in UK ports, airports and international train stations, and aboard ships, trains and planes.

However, as noted above, the government is also ending tax free sales in airports of goods such as electronics and clothing for passengers travelling to non-EU countries. It said that this “follows concerns that the tax concession is not always passed on to consumers in the airport. In some instances these tax free goods are brought back into the country by UK residents, putting high street retailers at a disadvantage,” added the Treasury.

That decision has prompted “grave disappointment and dismay” among members of the UK Travel Retail Forum.

The industry body said that the decision will cut billions of pounds from the UK aviation sector, and put thousands of jobs at risk, at a time when the industry is struggling to recover from the COVID-19 outbreak.

Speaking on behalf of UKTRF members, Chair Francois Bourienne said: “This decision puts the UK out of step with travel retail systems around the world, completely disincentivises tourists to visit the UK and British passengers making purchases as they go on vacation abroad, and puts UK airports and travel retail at a substantial disadvantage against their European counterparts after Brexit. This will lead to significant additional job losses in the travel industry.

“It may well be the best gift the UK could have given the EU as well as a massive blow for UK plc. In the more immediate term, this announcement deals a hammer blow to an industry already struggling with the devastating impact of the COVID outbreak. Retailer and airport revenue will suffer, but jobs and livelihoods will almost certainly be put at risk.

“While we are grateful for the government’s move to extend duty free sales to passengers travelling from the UK to the EU, we are extremely concerned that ministers have not fully appreciated the impact this decision will have on the wider travel retail and aviation sectors.

“We urge the government to immediately review its decision and act swiftly to ensure jobs, businesses and Britain’s place as a premier travel hub are not lost.”

Original source - The Moodie Davitt Report

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