UK government opens duty & tax free consultation

By Andrew Pentol and Luke Barras-hill |


The UK government’s consultation closes on 20 May 2020.

The UK’s HM Treasury and HM Revenue and Customs have launched an open consultation seeking evidence and views on the potential return of tax and duty free sales between the UK and EU.

Documentation seen by TRBusiness contains a number of questions and mooted policy options, including new opportunities following Britain’s exit from the EU on 31 January.

Published today (11 March) and coinciding with the UK government’s Budget 2020, the consultation will hope to address uncertainty surrounding possible duty free and tax free sales scenarios for UK-bound passengers from the EU and (vice-versa) after the transition period.

The consultation, which closes on 20 May 2020, allows the government to review its long-term approach to duty and tax free goods carried by passengers following Brexit.

These include the amount of goods passengers can bring into the UK without paying duty and tax; the sale of duty free goods to passengers on departure from the UK; the sale of tax free goods to passengers on departure from the UK; and the VAT Retail Export Scheme, allowing certain non-UK residents to obtain VAT refunds on high street goods purchased and taken home in their luggage.


Reacting to the consultation’s release, François Bourienne, Chair of the UKTRF told TRBusiness: “The UK Travel Retail Forum welcomes the opportunity to respond to the Government’s consultation on the post-Brexit duty and tax free regime.

“The return of duty and tax free sales for passengers travelling from the UK to the EU by air, sea or train will delivery substantial economic benefits and new jobs right across the UK, as well as delivering new options and experiences for travellers heading to the continent for work or leisure.

“UKTRF has been a strong supporter of the return of duty and tax free for a number of years. We appreciate the government’s willingness to engage with the industry on this important issue, and will be working constructively with ministers and officials as the policy is developed.”

In September, the UK Treasury announced that in the event of a hard Brexit, EU-bound travellers would be able to purchase alcohol and tobacco exempt of excise duty and taxes (as a potential non-EU country), but VAT would apply on all other airside products.

This decision was criticised by the UKTRF as putting UK airports and travel retailers at a huge competitive disadvantage compared with their EU counterparts.

UKTRF continues to lobby against this proposal and the consultation offers a vehicle to further influence government thinking [it is worth pointing out that while the threat of a no-deal Brexit has receded given the shift into the transition period, which will hope to pave the way for a UK-EU deal, a hard Brexit cannot be entirely ruled out- Ed]

World Duty Free store image

Travel retailers such as Dufry-owned World Duty Free will be seeking clarity on EU-UK trading arrangements.

As extensively reported, Britain is in the midst of a transition period until 31 December 2020 following its departure from the EU in January. In the interim, the UK will continue to subscribe to the Single Market and Customs Union and the status quo will remain, meaning no duty free sales between the UK and EU.

Duty free and tax free sales should in theory be permitted for EU-UK passengers and vice-versa at the end of the transition period, but the practicalities of how this could function remains unclear.


The consultation on duty free and tax free has been released against the backdrop of the UK Government’s 2020 budget. Source: HMRC.

Should the UK and EU fail to negotiate a deal by the end of the transition period, the UK would be treated as a ‘third country’, triggering the return of duty free sales.

As outlined in some detail by TRBusiness, a confusing set of scenarios emerged late last year offering EU travellers the chance to carry duty free and tax free shopping and duty and tax paid goods into Britain in the event of a hard Brexit – but not both without possibly incurring fees.


Government documents mapped out details of a new tax regime that could result in travellers being slapped with additional taxes and duties should they exceed permitted allowances.

Existing rules permit travellers to carry a virtually unlimited quota of duty paid goods into the UK, but those that choose to also purchase duty free cigarettes or alcohol would trigger ‘rest of the world’ (ROW) allowances.

For example, if a traveller buys a €1,500/$1,650 handbag from La Rinascente Milan, does not claim a VAT refund but purchases 200 cigarettes at duty free, ROW allowances are activated.

While the 200 cigarettes fall within the ROW tobacco allowance, the traveller would need to declare and pay added fees on their €1,500 handbag purchase as it falls outside the £390/$500 **other goods allowance.

Should the traveller not have shopped duty free, they would not be at risk of being liable for extra taxes or duties.

If they exceed their allowance, they will be liable for UK VAT and duties on the full value of the goods bought (not just those above their allowance).

There are other rules that apply to claiming VAT refunds in the EU, with some goods subject to duties before entry to the UK.

The UKTRF had previously expressed its concern over the proposed rules and messages from government regarding inbound duty free and VAT sales in the event of a hard Brexit due to the unfair rules it proposes on the carriage of certain goods, which could penalise unwitting travellers.

Aelia Duty Free Luton Airport

Aelia Duty Free store at London Luton Airport. Source: London Luton Airport.

**Other goods are subject to a £390 duty or tax cap (£270 if travelling by private plane or boat), but if a single item is worth more than the allowance the traveller pays customs duty and possibly import tax on the full value of the goods (not just on the amount above the allowance).

Read the published consultation document in full here.

Responses to the consultation questions outlined in Chapter 5 should be sent to the following address: Duty-free consultation, VAT and Excise Team, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ.

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