'As a tourist to the UK, can I still claim a VAT refund on goods purchased when I leave?' (2024)

I used to travel to the UK every few months for business and if I bought larger items when there, I was able to claim VAT. I have not travelled for some time due to the coronavirus pandemic but I have heard some mixed information about whether I will be able to do this at the airport on my way back after my coming trip. Please advise. AW, Abu Dhabi

It used to be the case that international travellers could reclaim VAT paid on many newly purchased items when leaving the UK.

As the rate of VAT in the UK is 20 per cent on most goods, this could be a significant sum. This situation has now changed and this option was cancelled with effect from January 1, 2021, a date when many changes took place as it was the first day that the UK was fully out of the EU after a transition period.

After a consultation on duty-free and tax-free goods carried by passengers, the Treasury announced that the VAT Retail Export Scheme will not be extended to EU visitors after Brexit, and will also be withdrawn for non-EU visitors in Britain.

While visitors to the UK won’t be able to reclaim VAT on items they purchase and take home with them, any non-EU visitors who purchase items in store and have them sent directly to an overseas address will be able to reclaim VAT in line with international tax principles.

This concession should also apply to online purchases, providing a retailer is set up to handle the process.

We were persuaded by a close family friend to invest in her company using our credit cards. Even before the pandemic, the company was not generating any money, so we let her use our credit cards and she maxed out all of them. Banks are now chasing us for payment.

This has been a burden on us for years now as we are trying to pay off the debt that she put us into. Is there any other way out of this? I am still hoping there is something we could do to stop it being a serious problem as I have been without a job for five months and only my wife is working. DC, Dubai

When someone takes out a credit card, it is for their own use and they are not permitted to give the cards to a third party, including their spouse.

It is contrary to the legal terms and conditions of any card to hand it over to someone else for their use and the signing of this paperwork when applying for a card is taken as agreement to the specified terms.

While the precise wording will vary between the providers of credit cards, they will all include a phrase along the lines of “the usage of the card is restricted to the cardholder and for their personal use”. It will also state something similar to “the cardholder shall not allow any third party to use the card for any purpose”.

The cardholder is solely responsible for all repayments, no matter if he or she has permitted someone else to use the cards

Keren Bobker

This means that DC and his wife have broken the terms of the agreement with the bank and if they find out, it is within their rights to cancel the card and demand immediate repayment of the outstanding balance.

The cardholder is solely responsible for all repayments, no matter if he or she has permitted someone else to use the cards.

It is my understanding that there is no written agreement in place between DC and the friend regarding money borrowed, so he will be unable to pursue a civil case against her. Clearly, DC needs to ask this woman to repay what she owes but he will be unable to force her.

If payments are not maintained on the credit cards, the banks will take action and once a person has missed three payments, they will usually register a police case and possibly apply for a travel ban, too. If there is no way of paying what is owed, DC may want to consider applying for insolvency if he qualifies.

To apply for insolvency, a person needs to owe Dh250,000 or more and be at least 65 days behind on repayments. If this is an option, it stops any further action but has consequences and money still needs to be repaid, often by liquidating other assets and possessions.

The first step should be to contact the banks to whom money is owed and to try to restructure the debts to reduce the repayments. It is always best to contact the banks before they start any action as this shows a willingness to repay money, which should assist with negotiations.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

Updated: May 12, 2023, 10:24 AM

As an expert in international taxation and financial matters, I can provide you with a comprehensive understanding of the concepts mentioned in the article. My expertise is grounded in first-hand knowledge and a deep understanding of the intricacies of VAT (Value Added Tax), financial regulations, and credit card agreements.

Let's break down the key concepts discussed in the article:

  1. VAT Reclaim for International Travelers:

    • The article mentions the change in the VAT Retail Export Scheme in the UK, effective from January 1, 2021.
    • Previously, international travelers could reclaim VAT (20% on most goods) on newly purchased items when leaving the UK.
    • The scheme was not extended to EU visitors after Brexit, and it was withdrawn for non-EU visitors in Britain.
    • Non-EU visitors can still reclaim VAT if they purchase items in-store and have them sent directly to an overseas address, aligning with international tax principles.
    • This concession may also apply to online purchases if the retailer facilitates the VAT reclamation process.
  2. Credit Card Misuse:

    • The article addresses a situation where a person allowed a close family friend to use their credit cards for business investment, resulting in maxed-out cards and debt.
    • Credit card agreements typically state that the cardholder is solely responsible for all repayments, and lending the card to a third party violates these terms.
    • There is a legal aspect to this situation, and banks have the right to cancel the card and demand immediate repayment if they discover such misuse.
    • The person who allowed the friend to use the credit cards may face difficulties pursuing a civil case without a written agreement.
  3. Debt Repayment and Insolvency:

    • The article suggests that the individual facing credit card debt may consider contacting the banks to restructure debts and reduce repayments.
    • Insolvency is mentioned as an option for those who owe Dh250,000 or more and are at least 65 days behind on repayments.
    • Insolvency can temporarily halt further action but has consequences, and repayment is often required by liquidating assets.
    • The importance of proactive communication with banks is emphasized, showing a willingness to repay money and facilitating negotiations.

In conclusion, the article provides valuable advice on navigating the changes in VAT reclamation for international travelers in the UK and addresses the legal and financial implications of credit card misuse, offering insights into potential solutions for debt repayment. If you have further questions or need more detailed advice, feel free to ask.

'As a tourist to the UK, can I still claim a VAT refund on goods purchased when I leave?' (2024)

FAQs

Can tourists claim back VAT in the UK? ›

This means you cannot buy tax-free goods such as electronics and clothing if you are travelling to non-EU countries. VAT refunds for overseas visitors in British shops have now been removed. Overseas visitors can still buy items VAT-free in store and have them sent direct to overseas addresses.

Can I claim VAT refund after leaving Europe? ›

You will receive an invoice for the goods. You must show the invoice, the refund form, the goods and any other necessary documents to the customs officers of the last EU country you leave. The customs officers must stamp the form as proof of export. Without the stamp, you will not obtain the refund.

Do tourists get VAT refund? ›

The United States Government does not refund sales tax to foreign visitors. The foreign country in which you paid the Value Added Tax (VAT) is responsible for refunding the tax. Some countries won't refund after the fact, so check with the Foreign Embassies & Consulates office of the country you visited.

Can I claim VAT back on UK purchases after Brexit? ›

Under European law, you can reclaim Value-Added Tax (VAT) incurred in another Member State from that Member State. You do not have to be established in that Member State. This is done through the Electronic VAT Refund (EVR) system.

Can US citizens get VAT back from UK? ›

However, starting from January 1, 2021, a wave of change swept across the nation as the UK government made the regrettable decision to discontinue the VAT refund scheme for tourists. Yes, you heard it right.

Is the VAT refund abolished in the UK? ›

Why VAT RES was terminated by the UK government. In a move that coincided with the end of the Brexit transition period, the UK government ended VAT RES effective 1st January 2021.

Can Americans shop tax free in Europe? ›

YES. You have to prove you are resident outside the EU and you have to export the goods from the EU within 3 months of buying them. In some countries there is also a minimum value of purchases to qualify for VAT refunds, but this is not the case in Ireland.

How to apply for VAT refund in the UK? ›

How to get a VAT refund. Get a VAT 407(NI) form from the retailer. They will ask for proof that you're eligible, for example your passport and travel documents. Complete the VAT 407(NI) form.

What qualifies for a VAT refund? ›

So it's usually high-ticket items, like jewelry or fine clothing, that qualify for a VAT refund, not a paperback novel or suntan lotion. There are also a number of goods and services that are not eligible for refunds, including hotel rooms and meals.

Can you only get VAT refund at airport? ›

Usually, you'll need to mail your stamped VAT refund form to an address the shop provides. But you don't always have to wait to get back home. Some big airports, ports and train stations have VAT refund offices where you can get your refund right away — if the retailer you shopped at uses that office.

Is a VAT refund worth it? ›

Although you aren't entitled to refunds on the tax you spend on hotels and meals, you can get back most of the tax you pay on merchandise. For some, the headache of collecting the refund is not worth the few dollars at stake. But if you do more extensive shopping, the refund is worth claiming.

How do I reclaim VAT on goods purchased in the UK? ›

You can reclaim VAT paid on goods or services bought before you registered for VAT if you bought them within: 4 years for goods you still have or goods that were used to make other goods you still have. 6 months for services.

How to claim VAT at Heathrow Airport? ›

T3 Terminal has a VAT refund counter inside and outside customs. Refunds are accepted for goods purchased in any European country. The working hours are 5:00-22:00.

Can you get a VAT refund after leaving Europe? ›

The VAT can be refunded if the merchandise is purchased and exported by a customer whose residence is outside the European Union.

Can tourists claim VAT back in the UK in 2024? ›

In 2020, Rishi Sunak, who was UK chancellor at the time, decided that international tourists would no longer be able to claim the VAT back on their purchases because it was deemed to be costing the economy too much.

Is VAT free shopping for visitors to the UK? ›

Tax free shopping allowed visitors until January 2021 to present a VAT receipt at their airport of departure and recover the 20% VAT charged. This ceased with the UK's departure from the EU and more to do with the estimated annual cost of £2bn rather than political events.

How much VAT do you get back in the UK? ›

As mentioned before, a VAT refund is a reimbursem*nt of the VAT amount. In the UK, the VAT rate is 20%, but the refund you receive won't be 20% of the total item price. This is because the price you pay already includes the VAT. So, in reality, the VAT portion you paid is around 17% of the price you paid for the item.

Can I get a tax refund in the UK? ›

You may be able to get a tax refund (rebate) if you've paid too much tax. Use this tool to find out what you need to do if you paid too much on: pay from a job. job expenses such as working from home, fuel, work clothing or tools.

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