The UK government has abandoned plans to reintroduce tax-free shopping for overseas visitors.

The scheme had been announced last month by then UK Chancellor Kwasi Kwarteng, as part of a wider range of measures outlined in the so-called “mini budget”.

But today (October 17) the new Chancellor Jeremy Hunt confirmed that the government would no longer be going ahead with the scheme, as he reversed the majority of the policies unveiled in September, including plans to reduce Income Tax and freeze alcohol duty rates.

The Chancellor said that “not proceeding with this scheme is worth around £2 billion a year”.

The old tax-free shopping scheme for overseas visitors was abolished in Britain at the end of 2020 following Brexit, although it remained in place in Northern Ireland under the terms of the Northern Ireland Protocol.

The government had planned to replace the previous paper-based system with a digital version, stating at the time that the new scheme would be in place “as soon as possible”.

In March 2021 a cross-party group of over 60 MPs and Peers wrote an open letter to the Chancellor of the Exchequer, calling for the introduction of duty free on arrival shops in British airports, international rail and ferry terminals.

The letter said that independent research from York Aviation showed that the move could increase passenger spend by between 20 and 30 per cent, and would “help our travel sector flourish and take full advantage of the UK’s EU departure”.

UK government urged to support duty free on arrival shops