Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what economic advice he has received from (a) his officials and (b) independent sources on the potential merits of introducing duty-free shopping at UK ports and airports.

Following a consultation in Spring 2020, the Government announced on 11 September 2020 that duty-free sales at UK ports and airports would be extended to EU-bound passengers for the first time in over 20 years from 1 January 2021. This is a significant boost to all ports, airports and international rail terminals in England, Scotland and Wales, including smaller regional airports and rail hubs, which have not been able to offer duty-free to the EU before.

The Government also announced that personal allowances would be introduced for passengers entering Great Britain from the EU. During the consultation stakeholders expressed concerns about this change, particularly those that deal with large volumes of EU passengers travelling to Great Britain in a vehicle by ferry or train, given many passengers were used to bringing back unlimited amounts of goods from the EU. The Government therefore used its freedoms from EU rules to significantly increase alcohol allowances for all passengers. This will now enable visitors to bring in, for example, three crates of beer, two cases of wine and one case of sparkling wine, without having to pay the relevant taxes, with Great Britain having one of the most generous allowances in the world.

The possible introduction of duty free on arrival raises a number of complex issues. For example, duty-free on arrival could undermine the UK high street and run counter to public health objectives. The Government would also need to consider the cost and any revenue and legal risks of introducing such a scheme. Any new tax relief will impose additional pressure on the public finances, to which excise duty makes a significant contribution. Duty on alcohol and tobacco raises over £22 billion and plays a key role in funding vital public services like the NHS and addressing harms caused by these products. Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing or increased taxation elsewhere. HM Treasury officials have held meetings with a number of stakeholders on this issue and continue to keep this under review.