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The government reviewed the excise duty and VAT treatment of goods purchased by individuals for their own use and carried across borders in their luggage. 

As part of several changes to duty-free allowances, the Treasury plans to withdraw the VAT RES for non-EU visitors after the end of the Brexit transition period and beginning 1 January 2021. Retailers will be able to continue to offer VAT-free shopping to non-EU visitors who purchase items in-store and have them sent directly to their overseas addresses. 

Under the current VAT RES rules, visitors from beyond the EU bloc could claim a refund on the VAT on items bought in the UK and taken home. The report concluded that: 

  • The international norm, consistent with OECD guidelines and WTO rules, is that VAT (and excise) on goods should be paid in the country of consumption.
  • The scheme is an imperfect way to ensure that VAT is paid in the place of consumption, not least due to the risk of fraud and non-compliance.
  • Evidence provided during the consultation and gathered by HMRC shows that the majority of purchases are made in London and following this, Bicester Village. It does not benefit the whole of GB equally, with purchases largely centred in London.

The consultation also laid out new rates for allowances for goods coming into the UK including a significant increase to the current allowance levels for alcohol for all passengers.

External link

‘A consultation on duty-free and tax-free goods carried by passengers’


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