Dave Noble

That , to me, was the big issue with the so called tax free shopping. One company I used to use would process the refunds itself - fill form in, get it stamped at airport and post back to retailer and wait for it to process the full tax refund. With the scam companies that were processing for many retailers , the tax free shopping was significantly just a profit stream for a company as opposed as providing a tax refund

AviosTreasureHunter

The Treasury used some calculation to work out it lost £2Bn a year to VAT refunds.
I think the 30 percent hit in sales plus the wider loss in VAT receipts, income tax receipts and corporation tax receipts from lost tourism (hotel rooms, restaurant meals, taxis) that high spending foreign based shoppers provided will be more than the £2Bn.
It is a madness to be 2 hours by high speed train to Paris which makes tax free shopping easy and no longer offer same in London.
From what I am reading of this proposed budget on Wednesday it sounds like a triple blow to UK. Higher APD, no mention of VAT scheme, and now watering down non dom status.
Real lack of understanding that we are in a competitive world. The high spenders don't have to come here. They can easily go elsewhere.
As previously mentioned I will however take even more satisfaction from my next Eurostar across the channel to hop on my APD free long haul J flight. A perfect example of behavioural change the government fails to take into account when they dream up these ideas.
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Arctic Troll

Tourists can still reclaim the VAT if they have their purchases shipped directly to their home country. Yes there are courier charges, but the VAT reclaim companies typically charged 10% service charges too.

Of course the disadvantage of direct shipping is that they will be more likely to have to pay import tax in their home country, rather than 'accidentally forgetting' to declare their goods at customs on arrival in their home country.

It shouldn't, though, make the tiniest bit of difference for tourists who are honest in their interactions with customs in their home countries.

AviosTreasureHunter

Well unfortunately high end retailers in London plus associated industries (hotels etc) are noticing lower sales figures than other large European hubs.
The Treasury say its a numbers game. They are correct. They think they will lose £2Bn a year by re-instating the old system, but how much are they losiing and how much is the wider economy losing from having a less competitive or convenient VAT refund process? I would guess easily more than £2Bn.
Nobody I know declares the rolex watch they bought in Bangkok!

Arctic Troll

Quite!

I still think that if the VAT refund process still only applied to non-EU people it wouldn't have changed, but the dreaded B-word meant it had to. It's not so affordable when EU people can visit on a day trip without adding value to the economy or the Exchequer and benefit from the refund too. £2bn is an awful lot of revenue to lose, it's over 3% of the entire VAT take, and it's a numbers game- would the VAT and other tax revenue from restaurant meals and hotel rooms for these 'missing' tourists be higher than £2bn, or not. The 'missing' tourists would add to the economy, but would they add more than £2bn to the Exchequer? I'm sceptical but happy to be convinced either way as it's not my area of business.

EU countries don't have quite the same consideration and so they can continue to offer it to non-EU residents.

AJNEDC

If he wants to hit the wealthy, why not target the billionaires when looking to redistribute wealth? Implementing taxes on the ultra-rich to ensure they pay their fair share seems like a reasonable approach. Alternatively, why not consider taxing wealth itself, including those benefiting from non-dom status? As for myself, I prioritize flying in premium classes not because I perceive myself as wealthy, but rather because I've set a personal standard and diligently save towards it, similar to other aspects of my life. However, if tax increases disproportionately affect individuals like me while providing relief to the truly affluent, it will prompt me to reassess my discretionary spending, particularly on travel

Jimmie76

Yes you’re correct we can deduct the VAT at source if it what they buy is shipped directly back to their country by us. The problem is that (even if they’re law abiding and happy to pay when they get home) psychologically they prefer to have the purchase with them

tom tulpe

Have you had a look at who's bankrolling the Tory party?

lhrsfo

All taxes a) distort economic activity and b) reduce economic activity. The question then boils down to how much they depress the economy, how much they distort the economy and what political factors you care about when implementing them.

The VAT debacle is a great lesson in this at work - it raised gross much less than expected and it looks like it depressed economic activity much more than expected which means that net net it probably had a negative tax take. But politically it sounded good - taxing wealthy foreigners.

APD is a different matter though and the calculations are very different. First of all, there is evidence of its original implementation and its subsequent increases to see what effect it had then. Second, it's a relatively small amount in the purchase of a ticket and, currently at least, fares are relatively low from LHR. Third, it's difficult to avoid as you have to leave the country somehow and most people aren't into ex-EUs. Fourth politically it ticks green boxes, anti airport expansion boxes and BA is a foreign company anyway so if it affects them, who cares?

The contrary arguments revolve around discouraging business travel to the UK and the massive economic hit which the UK would take if that becomes a factor. On its own, I suspect that HMT will conclude that this increase will only affect that at the margin but the problem is that the UK is becoming increasingly hostile to business - EU countries may conclude that but unfortunately we are also becoming hostile to non-EU business also - and the increase will serve to confirm that impression.

mnhusker

If you search through this site as I do (I'm retired) you will be amazed at the impact on decision making that APD and other fees that occur if you transit LHR on Award tickets of any kind. People are just stunned by the monetary impact of LHR versus AMS or FRA when going from the New World to the Old World, or New World to Asia and transit via LHR was an option.

I, like many often stop over in London on my way to European destinations as I have lots of favorite spots in that city. But as a retired person, LHR is starting to price itself out of position for my prime choice of travel. As I mentioned before, the J charge still would hurt me as I would not be buying a $3000-5000 ticket but would be upgrading with miles, where to 191 pounds added to the cost is a significant difference to what the upgrade cost would be otherwise.

So, instead of our last trip in Feb 2024 in London; looks like the next one will be going to Rome; None of my money for you Britain

Jagboi

Assuming the retailer even offers international shipping. When I was buying suits at the outlet at Bicester Village there was no mention of shipping being available, and even if it was the cost of shipping a suit wouldn't be cheap. I had a good baggage allowance with my air ticket, so why pay to ship something I can carry for free?

UKtravelbear

If you had a stop over in London for a couple of days and then flew to Europe you'd only pay the short haul APD so no where near the £191. You don't pay APD on flights to the UK

Returing to the US from Europe if you only transitted at LHR you'd pay no APD at all.

hfly

UKtravelbear, I'll bite.............So is he is buying for example some sort of D fare, Let's say ORD-(LHR)-MILAN for let's say $2800 in, he is looking at that APD of perhaps $300. If he does what you state, to fly ORD-LHR on one ticket, and LHR-MXP on another, yes, his APD might in fact be less. He might even be able to score a really cheap Y fare LHR-MXP-LHR, like a hundred quid if it is the right season/bought far enough in advance, etc. Oh, but he will probably be down $2000 or so, because LHR as part of an O/D is almost always significantly more expensive.

As I alluded to above, I know a guy who flies back and forth from LA to Europe at least 5 times a year in Business, He would ALWAYS stopover in the UK for two days on the way out, he liked to go out with a couple of friends, get a pint or two, acclimatize himself, etc. Since APD he goes through CDG, AMS, MAD, literally anywhere but London. For t hat matter, many a time I have flown my entire family ex-Europe to long haul destinations with BA in a variety of cabins, and have looked at the difference, and decided that we do not need a day in the UK if it is going to cost me an additional $1000+. If they do this, they really need to extend it to 48 or 72 hours.

UKtravelbear

The rules for APD have been in place for getting on for 30 years since it was introduced yet people still don't seem to be able to grasp them.

The stopver exemption rules have been in place since APD started with nary a major amendment.

APD is only payable on flights leaving the UK not to it and even there there are exemptions.

Anyone flying ORD-LHR-MXP with no stop over pays zero APD. ZERO. I'll repeat that ZERO. What that does to the fare is a different matter.

If you have a stop over greater than 24 hours in London before flying to MXP you would only pay the lower rate of APD so £26 in business.

If you chose to have the stopover in the way back the the £191 rate would apply on the ex LHR flight and even then you could still have a stopver less than 24 hours and still not have to pay it.

hfly

Yes bear, that is why I and others have very SPECIFICALLY SAID that if they raise it, then the STOPOVER limit should be EXTENDED to 48 or 72 HOURS as this is not just in the best interests of passengers, but BA as well as the UK economy. FYI what you wrote is sort of disingenuous, as:

When it was introduced it was a WHOPPING 5 GBP and 10 GBP! Three Years later it doubled to 10 and 20 quid (1997), Then four years later (2001) It doubled again to 20 and 40 quid respectively. 6 years later it doubled to 40 and 80 quid (2007). From then they introduced a ton of bands, but if we are talking about long haul in'tl flights they essentially went up to 138 quid in 2014. Without some other confusion, we are now at 191 GBP. So a connecting long to short flight Europe to the US would have cost 15 GBP 30 years ago, and today costs 217 GBP per person. so that is a 15x rise over 30 years, so about $300 per person, $1200 for a family of four, and which would have cost $84 for four people way back then.

Also did you not understand the married segment example above?

I should also add that once upon a time, and not 30 years ago, if you upgraded, no one came after you for a higher APD, That was a wonderful pencil pushing move around 2008 IIRC, when they gave the excuse at some point that the rising APD would be used for environmental purposes, not just seemingly into the general HMRC hamper.

So yes, we all do understand the APD rules in great detail, and we also understand why after raising it 15x (probably 30x if you are on an upgraded seat) that they might want to make the transfer period a bit longer.