UK losing £2 billion annually as result of 'Tourist Tax'

30 Sep 2025

Research published by the Association of International Retail (AIR) has revealed that the UK is losing out on nearly £2 billion as a result of the scrapping of VAT breaks for tourists.

Spending by international visitors has fallen since the VAT exemption was removed in 2021. In contrast, other European countries have seen record surges in tourist spending: this increased by 166% in Spain; 137% in Italy; and 159% in France when compared to pre-Covid statistics.

The research also showed that visitors from Saudi Arabia and Kuwait spent 27% less in the UK when compared to figures recorded before the Covid-19 pandemic.

The retail industry is urging Chancellor Rachel Reeves to restore the VAT exemption for tourists in the Autumn Budget on 26 November. It states that doing so could help to boost the UK's competitiveness with other countries and help raise billions for the Treasury.