Heathrow: Britain has ‘shut the door’ on home-grown growth with tourist tax

Europe’s largest airport, Heathrow, has warned that Britain has “shut the door” on home grown growth by abolishing VAT-free shopping for overseas visitors.

The west London hub’s officials made the comments as it reported a slight uptick in passenger numbers at the start of the year.

In its monthly traffic report, Heathrow Airport said that despite “thriving” exports, Britain was turning away international shopping through the so-called ‘tourist tax,’ while “tarnishing the UK’s reputation as a competitive country to spend and do business with.”

Business groups and the UK’s major airports are furious at the government for scrapping the tax in 2021, which saw shoppers able to claim 20 per cent back with their purchases. It was particularly popular with wealthy tourists, who would travel to London to splash out on designer goods.

Last week, it was revealed the Treasury’s independent forecaster, the Office for Budget Responsibility (OBR), would launch a review of the tax ahead of next month’s Spring Budget, fuelling speculation the controversial decision could be reversed.

Heathrow’s fresh calls come despite January passenger numbers ticking up 9.4 per cent year-on-year to just under 6m.

The Hounslow hub has forecast record levels of traffic in 2024, as consumers continue to prioritise holiday spending in the post-Covid era.

Heathrow chief executive Thomas Woldbye said: “The year has got off to a strong start, retaining Heathrow’s crown as the best UK airport.”

“We are ready for the first passenger peak of the year, with February half term fast approaching. Whether you are travelling to ski, soak up the sun, or visit friends and family, Heathrow has you covered.”