Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Government’s decision to withdraw tax-free shopping for international visitors from 1 January 2021, what the total value of tax-free spend was in (a) Edinburgh and (b) Glasgow in 2019.
Answered by Kemi Badenoch - President of the Board of Trade
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continueing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers.
HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect on (a) long-haul air travel demand and (b) and long-haul connectivity at Scottish airports of the cessation of tax-free shopping for passengers from 1 January 2021.
Answered by Kemi Badenoch - President of the Board of Trade
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continueing to meet and discuss with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers.
HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what his Department's definition is of a viable job.
Answered by Steve Barclay - Secretary of State for Environment, Food and Rural Affairs
The Government, through the Job Support Scheme, is targeting support on those businesses that are being impacted by Coronavirus and who can support their employees doing some work, but that need more time for demand to recover.
As the Chancellor said, it is clear we are living with Coronavirus for a while, and therefore, our economy is likely to undergo a period of adjustment and it is right that our approach to economic support evolves.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, on how many occasions Ministers in his Department have met the Secretary of State for Transport to discuss the effect of the covid-19 outbreak on the aviation industry in each of the last three months.
Answered by Kemi Badenoch - President of the Board of Trade
HM Treasury Ministers have regular discussion with the Secretary of State for Transport on a range of topics.
The Government has announced an unprecedented package of support for workers and businesses to protect against the current economic emergency.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many meetings Ministers in his Department have had with representatives of the aviation industry on the covid-19 outbreak in each of the last three months.
Answered by Kemi Badenoch - President of the Board of Trade
Treasury Ministers and officials meet with a wide range of stakeholders across sectors as part of ongoing policy development and implementation.
Ministers and officials from the Department for Transport are in regular contact with airlines, airports and unions to understand the impact that COVID-19 is having on the sector and its workers.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how often Ministers in his Department have held discussions with representatives from UK airports since the start of the covid-19 outbreak.
Answered by Kemi Badenoch - President of the Board of Trade
Treasury Ministers and officials meet with a wide range of stakeholders across sectors as part of ongoing policy development and implementation.
Ministers and officials from the Department for Transport are in regular contact with airlines, airports and unions to understand the impact that COVID-19 is having on the sector and its workers.
Asked by: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has plans to extend eligibility to veterinary practises to business rates relief during the covid-19 outbreak.
Answered by Jesse Norman
Business rates are devolved in Scotland.
In England, the Government has provided enhanced support to the retail, hospitality and leisure sectors through business rates relief given the direct and acute impacts of the COVID-19 pandemic on those sectors.
A range of further measures to support all businesses, including those not eligible for the business rates holiday, such as veterinary practices, has also been made available. For example, the Government has launched the Coronavirus Job Retention Scheme to help firms continue to keep people in employment, the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank backed by an 80% Government guarantee, and the deferral of VAT payments for this quarter.
The Government will consider any further financial assistance necessary to help businesses get through this period.