Duty Free Allowances

(asked on 6th October 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect on tax revenues of his plans for duty-free and tax-free goods at airports announced on 11 September 2020.


Answered by
Kemi Badenoch Portrait
Kemi Badenoch
President of the Board of Trade
This question was answered on 12th October 2020

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 to or from Great Britain. The following rules will apply from 1 January 2021:

- Passengers travelling from Great Britain to any destination outside the United Kingdom 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 United Kingdom, with alcohol allowances significantly increased.

- The concessionary treatment on tax-free sales of non-excise goods and the VAT Retail Export Scheme will not be extended to passengers travelling to the EU, and will be withdrawn for all passengers.

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 has also continued to meet and discuss with key stakeholders following the announcement of these policies.

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 before.

The final costing 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.

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