With the next UK general election set to take place on 4^th July, the British Fashion Council’s chief executive Caroline Rush has called on the next UK government to axe what has been dubbed the “tourist tax”. 

It was back in 2021 that Prime Minister Rishi Sunak — at that time Chancellor of the Exchequer — decided to impose VAT on purchases made by international tourists in the UK. However, Rush warned that the levy has made the UK the “least competitive capital for retail in Europe”. 

As a Shopify agency for high-end brands, we are determined to help them overcome barriers to their chances of commercial prosperity. Still, many ecommerce businesses also operating brick-and-mortar outlets could stand to particularly benefit from any near-future reversal of the “tourist tax”. 

Words of warning from a respected figure on the UK fashion scene

As head of the British Fashion Council (BFC), Rush organises London Fashion Week (LFW), one of the most prestigious yearly events on the British cultural calendar.

With shoppers from overseas now paying 20% extra for goods in the UK than in nearby countries such as France and Italy, the business world has repeatedly called for the ruling Conservative Party to change course on the tax. So far, these pleas have fallen on deaf ears. 

As quoted by the Daily Mail, Rush recently commented: “The withdrawal of VAT-free shopping for international visitors in the UK has made London the least competitive capital city for fashion retail in Europe, and businesses here are feeling that.”

The next government, if “serious about growing the economy”, should “immediately move to reinstate this vital tourism incentive to unlock economic opportunity in the fashion and retail sectors,” according to Rush. 

UK fashion players “at a significant competitive disadvantage”

In June, a BFC spokesman commented: “The UK is now the only major economy in Europe not to offer tax-free shopping to overseas visitors. This places UK fashion designers, retailers, and manufacturers at a significant competitive disadvantage compared to other markets.”

This observation led the spokesman to declare: “The scheme must be restored to ensure competitive parity with neighbouring nations.”

As per a report from the Centre for Economics and Business Research, the tax is losing the UK economy over £11 billion a year. Lifting the levy would incentivise tourists to spend more on not only retail purchases but also accommodation, dining, and theatre outings while in the UK. 

How can UK fashion firms prepare for an unpredictable future?

Although Shadow Chancellor of the Exchequer, Rachel Reeves of the Labour Party has expressed a wish to become the UK’s most “pro-growth” Chancellor in history, the Mail on Sunday “understands that Labour does not support ditching the levy.” 

We take pride in being a Shopify agency for high-end brands keen on driving increased online custom as a fallback to counter the threat of a potential downturn in high-street retail. 

To learn more about how we could help your efforts to grow your fashion, luxury, or lifestyle business irrespective of the general election result, please email hello@skywire.co.uk. 

Photo by freestocks on Unsplash