UK to review VAT savings at airside shops

UK chancellor George Osborne has confirmed the government will launch a review into airport sales to make sure VAT savings are being passed on to shoppers.

As thousands of travellers head off for New Year’s getaways, the chancellor confirmed that the extensive review will make sure that VAT relief in airports is leading to savings for shoppers, as it is intended to do.

Currently, some airside retailers are keeping up to an estimated 50p of every £1 of potential VAT savings instead of passing those savings on to shoppers, argued the chancellor.

The HMRC has been tasked to review airside VAT-free shopping to make sure that shoppers share more of the benefit in future.

The review is expected to be completed by early 2016 and will also cover all other airside shopping taxes.

Osborne said: “For families flying out of the UK for a winter-getaway, airports should be the ideal place to pick-up a bargain.

“VAT relief at airports is intended to cut prices for those travellers – not be a windfall gain for shops.

“But many people could be paying over the odds for their purchases because the Government’s VAT concession isn’t passed on.

“This is simply unacceptable.

“I have launched a review to make sure that this VAT relief benefits those it’s intended for – consumers – whatever time of the year they are travelling.

“This review will consider ways to ensure prices reflect VAT savings as well as savings on duty.”