Duty free return looms as UK and EU agree Brexit deal on Christmas Eve

By Luke Barras-hill |

Duty free shopping between the UK and EU will return on 1 January.

Great Britain and the European Union have announced a post-Brexit trade agreement just seven days before the end of the transition period.

Having been locked in all-night talks, UK and EU negotiators rubber-stamped the deal today.

As expected, duty free liquor and tobacco sales for EU-bound travellers from the UK will restore on 1 January 2021.

Travellers to the EU from England, Wales and Scotland will no longer be subject to UK excise taxes or duties on these items at British ports, airports, international train stations, on ships and airlines.

SAVE TAX FREE FIGHT NOT OVER

Those travelling to the UK from the EU can benefit from a healthy allowance of duty/ tax paid goods or bring home limited quantities of duty free purchases – but not both without incurring possible fees, as TRBusiness revealed last year.

The UK’s affiliation to the EU Single Market and Customs Union preserves the ‘status quo’ arrangement with regards to duty free sales between the UK and EU until the end of the Brexit transition period on 31 December.

Non-EU and EU travellers to Great Britain will also enjoy a significant lift in their inbound personal allowances as a result of the new rules, including an alcohol quota of 42 litres of beer and 200 cigarettes.

EU arrivals to the UK can continue to carry an unlimited quantity of goods (including excise goods) into the country provided they are for personal consumption/gifting, are transported by the traveller, and the duties and taxes have already been settled in the originating country.

EU-bound passengers will be able to buy duty free alcohol and tobacco at British ports, airports, international train stations, aboard ships, trains and airlines, effective 1 January 2021, but tax free sales on all other products will end.

Tax and duty free sales to travellers within the EU were abolished in 1999, but the UK’s withdrawal from the EU on 31 January has paved the way for the restoration of sales between the UK and EU countries.

Reports that the EU and UK were on the cusp of a trade deal have dominated international headlines over the past 24-48 hours.

That a deal has finally surfaced ends a nail-biting conclusion to an unbearable year wrought by the global economic and social damage inflicted on countries due to the coronavirus (Covid-19) pandemic.

While precise details of the agreement will emerge in the coming days and week, the gesture represents a positive development that ushers in quota- and tariff-free trade for UK industries, a position that looked almost unrecognisable as little as one week ago given the stubborn dialogue around fisheries.

In the case of travel, UK passengers will no longer be able to use fast-track passport control and customs lanes applicable to the EU and the European Health Insurance Card will end.

However, visa-free travel will be permitted to most EU countries, Iceland, Liechtenstein, Norway and Switzerland.

While news of the belated trade deal will be welcomed by both sides, the UK government is yet to reconsider its position regarding removing airside tax free sales on non-excise duty products such as beauty, fashion and electronics, and the VAT Retail Export Scheme (VAT RES).

A volley of opposition from businesses, including High Street retailers and airports, and MPs together with concerted lobbying from travel retail associations and other aviation stakeholders greeted the Treasury and HM Revenue & Customs’ decision to remove the schemes.

The followed an announcement in September that dovetailed with responses to a consultation on the potential approach to duty and tax free goods arising from the UK’s new relationship with the EU.

This publication continues to play an important role in pushing the government to overturn – and at the very least reconsider ­– what many view as an ill-timed and ultimately costly ‘hammer blow’ to the UK’s economy that could cost tens of thousands of jobs and billions of pounds in lost revenue.

As reported, the government formalised its position to abolish VAT RES and the extra-statutory concession earlier this month amid mounting pressure on Chancellor Rishi Sunak to change course. This has included a legal challenge against the decision led by Heathrow Airport.

The petition to ‘Keep tax-free sales at airports and the VAT Retail Export Scheme’ reached 10,000 signatures on 2 December, prompting a government response, and continues to amass support.

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