Conservatives pledge to restore tax-free shopping for non-EU visitors

The Conservatives have promised to bring back tax-free shopping for visitors from outside the EU.

Ministers scrapped the VAT Retail Export Scheme for non-EU visitors in 2021. The scheme had allowed overseas visitors to get a VAT refund on goods bought in Great Britain and taken home in luggage. VAT is the sales tax added to most goods. It was abolished under the previous Conservative government and was not extended to EU visitors, according to BBC.

Kemi Badenoch was a Treasury minister when the relief was abolished. She is now leader of the Conservative Party. At the time, she described the relief as a "costly relief which does not benefit the whole of GB equally".

The Conservatives now plan to restore VAT refunds for eligible visitors from outside the EU. The party said the restored scheme would be extended to EU visitors by the end of the next Parliament if evidence confirms it pays its way.

The party said the cost of reintroduction would be offset by cracking down on NHS health tourism, where people from abroad use NHS care they should pay for. It said the 2021 decision had left the UK less competitive than European destinations.

Mrs Badenoch said "businesses were being let down by a tax policy that is chasing their customers away". The party cited research by the Centre for Economics and Business Research. The research suggested fully restoring tax-free shopping could attract up to 2.35 million extra visitors and generate £4.1bn in extra spending. It estimated that for every £1 of VAT refunded, £1.54 in other taxes could be generated.

The proposal was trailed for unveiling on Sunday, September 20, 2026, according to The Telegraph.

The broader context here is one Westminster watchers will recognise. A pledge to reverse a 2021 abolition invites questions about costs and delivery. A condition on EU visitors and a named saving do part of that work. Both will be tested line by line.

Looking at what this means for the politics of the offer, three tensions matter. The first is credibility with retailers, who have lobbied on this for several years. On July 21, 2025, retailers were renewing efforts to persuade Chancellor Rachel Reeves to bring back tax-free shopping for tourists, according to Bloomberg. The second is consistency. On September 23, 2022, finance minister Kwasi Kwarteng announced Britain would bring back sales tax-free shopping for overseas visitors to boost the retail sector, according to Reuters. That announcement did not survive. The third is scope. A non-EU restoration with a conditional EU extension creates a two-stage commitment. The Treasury test will be evidence, and the political test will be patience.