Last week’s Budget included the launch of a consultation on the government’s post-Brexit plans for duty- and tax-free shopping by travellers, i.e. goods purchased and carried across borders by passengers in their luggage for their personal use. The review covers sales of excise dutiable goods such as alcohol and tobacco, as well as gifts and other goods at ports and airports, and on planes, ships and trains.
Passengers are currently allowed to purchase unlimited quantities of these goods in the EU and bring them back to the UK, on the basis that they have paid duty and VAT in the country of purchase.
However, this is limited to goods for personal use and, as the UK generally has much higher duty rates on alcohol and tobacco than most other EU countries, UK Border Force has powers to investigate imports of these goods that exceed indicative limits (currently 800 cigarettes, 1kg of tobacco, 110 litres of beer, 90 litres of wine and 10 litres of spirits). This is to prevent resale at prices well below those that can be offered by legitimate UK sellers.
The consultation seeks views on the following plans.
- To reintroduce duty-free personal allowances for passengers arriving in the UK from the EU, HMRC is seeking comment on whether the allowances should be the same as the current allowance for passengers arriving from outside the EU.
- 16 litres of beer, 1 litre of spirits and 4 litres of wine.
- 200 cigarettes or 250g of tobacco (but not both).
- Making duty-free sales available to passengers departing from the UK for an EU destination.
- Extending duty-free sales, currently allowed in shops, bars and restaurants on board planes and ships, to trains travelling to the EU.
- Whether to extend or abolish airside tax-free sales of non-excise goods, such as electronic goods, jewellery etc. The current allowance for these goods is £390 (£270 for arrivals by private plane or boat).
- Reforming the retail export scheme which allows overseas visitors to claim VAT refunds on goods they purchase at UK high-street retailers for export. The government is asking for comments on the effectiveness of the current scheme before it decides whether to extend it to cover EU residents.
The consultation period ends on 20 May 2020. The UK will be entitled to make changes once it leaves the EU’s VAT and customs regimes at the end of the transition period, currently scheduled for 31 December 2020. However, the consultation document does not explicitly state that any new policy would come into force immediately after that date. Details of the plan may change depending on the UK’s future trading relationship with the EU, which is currently under negotiation. Northern Ireland will be considered separately.
It is possible that this exercise may result in a drastic cut to the amount of goods for personal use that can be moved across the UK/EU border without payment of further customs charges, meaning that ‘booze cruise’ day-trips across the channel to buy from hypermarkets near French ports are less of a money-saver for shoppers. The changes are also likely to result in the return of the ‘red and green channel’ model for going through customs, with the end of the blue channel for EU arrivals. This would require significant infrastructure changes at ports which currently deal solely with passengers from the EU.
As with many Brexit-related changes, it will be a challenge for the government to make sure these facilities are ready for the end of 2020, particularly with the current coronavirus situation we are facing.