Loss of tax-free status more damaging to West End businesses than cost-of-living crisis

  • Nine in ten West End businesses say they have been hit by the absence of tax-free shopping
  • In comparison, just over half say they have been affected by the cost-of-living crisis
  • Majority of those surveyed say they are reviewing U.K. investment and staffing requirements as a result
  • Findings come ahead of Parliamentary debate on Thursday 7 Sept, as calls for Treasury to reinstate tax-free shopping grow louder

New data released by the New West End Company today reveals that the absence of tax-free shopping has negatively impacted the majority of West End businesses. A survey of retail, hospitality, leisure and F&B businesses in the district found that nine in ten respondents (92%) have been affected by the loss of the VAT Retail Export Scheme (VAT RES). The impact it is having on businesses is significantly higher than other pressures they are facing, such as the cost-of-living crisis or inflation (both 58%).

The survey also revealed that businesses were taking proactive measures to mitigate the impact of tax-free shopping; over half (54%) confirmed their business was reviewing future U.K. investment strategies, with a similar proportion (48%) reconsidering staffing requirements to manage costs.

Of those affected by the ‘tourist tax’, 72% reported a fall in the overall numbers of visitors, whilst 89% reported a decrease in spending by international visitors. In addition, 42% said the average transaction value had fallen. More than one in five (21%) of those polled said they were considering U.K. closures or reallocating capital to other countries as a result of the tourist tax.

The findings, which will be presented as evidence in the Parliamentary debate this Thursday, confirm that the introduction of an effective 20% premium on tourist spending in London has had a significant and damaging impact on West End businesses, and is likely to have a long-term effect on U.K. investment and employment as a result.

The research also backs up recent forecasts from the Centre for Economics and Business Research that removing the tourist tax would bring in up to £10 billion extra a year to the British economy and encourage investment into the UK.

Dee Corsi, Chief Executive of New West End Company comments:

“Speaking to our members, it is clear that the impact of the ‘tourist tax’ is far reaching, affecting retailers, hospitality, F&B and leisure providers. Our research shows that it is proving more of a concern than the cost-of-living crisis and inflation – an unnecessary barrier to growth that U.K. businesses do not need in an already challenging economic environment.

“The Treasury has the opportunity to reinstate tax-free shopping, at no cost to the Exchequer, and inject much-needed growth into the economy. It would make it easier for businesses to justify continued investment in the U.K., safeguard existing jobs and create a more competitive trading environment.

“It would also put us in the unique position of being the only major European shopping destination for 450 million Europeans residents to shop tax-free, potentially opening up a whole new tourism market.”



Press Office

Good Relations


020 7932 3681