Brexit may kill London as a luxury shopping destination, with scrapping of tax rebate on purchases likely to put off international customers
- Worried that EU visitors post-Brexit would start claiming back value added tax on luxury purchases, the UK scrapped its rebate on the tax
- This makes the UK the only country in Europe not to offer such a rebate and makes Paris and Milan more attractive, as customers can save thousands of euros
London has always been a honeypot for Chinese shoppers. Friendlier than Paris and faster-paced than Milan, it has a more accessible culture and more direct flights from China than any other European city – and a healthy population of Chinese students.
Since the Brexit vote and the subsequent crash of the pound, it has also been one of the cheapest places in the world to shop for luxury goods – and as a result 800,000 Chinese nationals flew into the British capital in 2019.
On these trips, many would visit the boutiques of New Bond Street and then take a bus down to Harrods or Harvey Nichols, or a train to designer outlet shopping centre Bicester Village. And at Heathrow airport on their way home, they would claim back 20 per cent of the purchase price of all goods over £135 (US$185): if you’ve spent a week splurging on luxury fashion, that can mean a lot of money.
However, worried that visitors from the EU, who are now third-party nationals, would start claiming back VAT, the British government scrapped the VAT rebate. Right now, it’s a moot point, as nobody is jetting in for a trip to Liberty, but once the pandemic eases off, will Chinese customers strike London off their shopping list?
“London is the luxury capital of the world,” says Helen Brocklebank, the CEO of Walpole, the official body for British luxury. “There is an incredible ecosystem of art and culture and theatre and restaurants that bring in people from around the world – but fashion is a huge part of that, and without it London becomes less attractive.”
