2024 UK Tax Refund Strategy: How to Continue Duty-Free Shopping After Brexit?

Introduction

According to a document published by the UK Treasury on September 11, 2020, it clearly stated that VAT refunds for overseas tourists purchasing goods in British stores will be cancelled, meaning there will no longer be tax refunds before departure. Besides tobacco and alcohol, with the cancellation of airport duty-free services and the significant reduction in the variety of goods sold in duty-free shops, can overseas consumers still purchase products at duty-free prices in Britain? Of course! But the downside is that they cannot be directly taken back home. Currently, overseas consumers in Britain purchase duty-free products through "door-to-door tax refund" services. These services are usually provided by tax refund companies. Consumers can receive a tax refund form when shopping, and then send the goods to a designated tax refund company office before departure. The tax refund company will handle the tax refund procedures for them. The refund amount will be returned to the consumer via bank transfer or other specified methods. Although they cannot directly take purchased products out of Britain, through the door-to-door tax refund service, overseas consumers can still enjoy the convenience of buying goods at duty-free prices in Britain. This method allows consumers to receive the tax refund amount after departure and retrieve their purchased products upon returning to their own country.

How to duty-free shopping?

Overseas visitors in the UK can still purchase duty-free goods, but they cannot take them out directly. Instead, they need to provide an overseas address and have the goods shipped directly there after payment. At the same time, you need to bear the corresponding international shipping costs yourself. This method allows overseas visitors to enjoy the pleasure of shopping at duty-free prices in the UK while avoiding the inconvenience of carrying goods. You only need to provide your accurate overseas address when shopping, and the store or tax refund company will assist you in arranging the shipment of the goods. You can choose express delivery or postal service to send the goods directly to your designated overseas address. It is worth noting that you need to pay the corresponding international shipping fees yourself, which depends on factors such as your address, the weight of the goods, and the shipping method. When choosing this method, it is recommended that you inquire about the shipping costs beforehand and ensure that you provide the correct overseas address to ensure the smooth receipt of your purchased goods.

VAT Refund Strategies for the UK: I. Who can get a refund?

When shopping in the UK, the price of goods includes the price of the goods themselves and a 20% value-added tax (VAT). This tax is for the service of domestic taxpayers, so as tourists or those leaving the EU, you cannot enjoy this tax rebate, therefore you have the right to claim a refund. So, who can get a VAT refund?

Non-EU nationals who come to Britain for tourism, visiting relatives, or business
Long-term residents in the UK who are non-EU students or workers and are about to leave the EU and meet the refund requirements for more than 12 months. But remember, only goods purchased within 3 months of leaving the UK can be refunded.

(The information provided above is for reference only, please confirm the local VAT refund policy and eligibility requirements before shopping.)

【UK Tax Refund Strategy】II. Which is cheaper, tax-free or tax refund? What's the difference between the two?

## Tax-Free vs. VAT Refund: Which is Cheaper? **Tax-Free** The most common example of tax-free shopping is at airport duty-free stores. "Tax-free" means exempting goods from import duties and value-added tax (VAT) incurred upon entry. Different products have different tax rates, ranging from 20% to 100%. There are no restrictions on tax-free items. Anyone departing can purchase them at duty-free stores with their passport and boarding pass. **VAT Refund** A VAT refund refers to the consumption tax and value-added tax. Each country has different tax rates; for example, in the UK, the rate is 20%. VAT refunds have identity restrictions primarily targeting tourists and non-EU residents about to leave the EU. The specific eligibility criteria for VAT refunds have been detailed previously. **Which is Cheaper: Tax-Free or VAT Refund?** * **Tax-Free:** is fixed. If a product's import duty rate is higher than the VAT, purchasing at a duty-free store will be more cost-effective. Examples include alcohol, tobacco, tea, perfume, and cosmetics; these are typically cheaper at duty-free stores. * **VAT Refund:** On the other hand, for luxury goods like bags, clothes, shoes, and jewelry, where the import duty rate is already low, purchasing from a regular shop or boutique and then claiming a VAT refund might be more cost-effective. **For permanent residents, students, and those on work visas who are ineligible for VAT refunds, purchasing any product at a tax-free store is always the most advantageous option.** (Image source: @CFI)

UK VAT Refund Strategies: How Much Can You Get Back?

Tax refund refers to the return of value-added tax (VAT). The VAT rates vary across different countries. The VAT rate in Britain is 20%. However, this doesn't mean you can get 20% of the commodity price as a tax refund amount. Because the actual price you pay equals the actual price of the commodity plus 20% of the actual price, the calculated VAT is approximately 17% of the price you pay. However, this 17% also needs to deduct the processing fees of the tax refund company. The final actual tax refund amount is approximately only about 12% of the price you paid.

Which items are eligible for tax refund?

Not all goods are eligible for tax refunds. Therefore, some goods are not taxed in the first place and there is no refund available. Here is a list of non-refundable goods:

Goods exported for business purposes with a value exceeding 600 British pounds.
Goods shipped out by sea.
Goods requiring export permits (except antiques).
Individual gemstones not used in setting.
Gold bars weighing more than 125 grams, 75 ounces, or 10 Troy ounces.
Online purchases (except certain e-commerce platforms that offer direct shipping to China and online tax refunds).
Consumable goods that have already been used, such as perfumes.
Service charges, such as hotel fees.
Goods subject to 0% VAT, such as: most food, books, newspapers and magazines, children's clothing (under 13 years old).
Newly purchased cars or used cars.
Goods purchased by passengers planning to leave the EU by ship.

UK Tax Refund Strategy] Five, Traditional Tax Refund Process

Shop and get a tax refund form. When checking out or at the tax refund service center, tell the clerk you need "tax refund," the clerk will issue a tax refund form and put your shopping receipt and tax refund form in an envelope. The clerk may ask for your passport to confirm if you meet the tax refund requirements.
Fill out the tax refund form. Different stores provide slightly different tax refund forms, but the basic content is roughly the same.
Get customs stamp. Before leaving, show your tax refund form and shopping receipt to customs. After customs confirmation, they will stamp the tax refund form (Tax Free Form).

You need to prepare the following: passport, ticket, tax refund form, shopping receipt, the goods you want to refund taxes on (do not check in your luggage too early, as customs will check if your purchased items match the receipt and tax refund form. If you cannot present the items, you will not be able to proceed with the tax refund process).
Obtain the tax refund. Go to the tax refund point marked with the relevant tax refund company logo, show your completely filled and stamped tax refund form, and get a cash or credit card refund. Currently, there are four major tax refund companies in Britain: Global Blue, Premier Tax Free, Tax Free Worldwide (which is currently a branch of Premier Tax Free), GB Tax Free. These four companies do not all offer cash refunds, generally the tax refund form clearly states this information, please distinguish carefully before applying.

UK Tax Refund Guide ] Six, Tax Refund Locations

## Instant VAT Refund Instant VAT refund means processing the tax refund paperwork right at the point of purchase, but not many stores offer this service. After shopping at Bicester Village, you can directly process your VAT refund at Change Group near the visitor center. ## Other VAT Refunds Some large shopping areas also have VAT refund points. However, other VAT refund points have stricter inspection standards than airport VAT offices and generally only handle refunds for goods purchased in the UK. Remember to bring your VAT-refunded items, flight tickets, passport, and British VAT receipts (European VAT receipts are not applicable). ## Airport VAT Refunds

London Heathrow Airport
London Gatwick Airport
Manchester Airport
Birmingham Airport
Edinburgh Airport
Glasgow Airport

UK Tax Refund Guide: 7 Tips for Online Shopping Tax Refunds

One of London's famous department stores, "Selfridges," offers tax refunds! You can try on items at Selfridges' physical store and then have your desired purchases shipped to locations outside the UK to avoid paying British taxes. However, please note that if you choose this service, you will not be able to take your purchases with you immediately after checkout!

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