Dec 14, 2020
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Heathrow could lose 2,000 jobs as tax-free shopping changes

Dec 14, 2020

The world’s (usually) busiest airport, Heathrow, could lose up to 2,000 jobs if the UK’s decision to change the rules around tax-free shopping for tourists goes ahead, the airport’s CEO claims.

Fendi's Heathrow boutique

He said that while 2021 should be all about economic recovery, the rule change will hit retail and other tourist-dependent sectors hard.

As of the end of this year, tourist shoppers will no longer be able to claim their VAT refunds at the airport for items they bought and are carrying back home themselves. Instead, they will only qualify for a sales tax refund if they choose the ‘ship home’ option when they buy their goods.

While the government claims this brings the UK in line with the rest of the world, it actually puts it out of step with the rest of Europe and there have been fears that many tourists will now decide to go to other countries such as France and Italy to do their shopping.

The big fear in the retail sector is that the large number of jobs dedicated to tourist shopping, and the large number of stores that have opened at hubs such as Heathrow and other airports, are now at risk.

Heathrow CEO John Holland-Kaye said the “tourist tax” could be the “final nail in the coffin” for many under-pressure businesses in retail.

The airport has already taken a huge hit to its retail revenue this year and passenger numbers remained historically low (down 88%) in November.

And while Heathrow’s total revenue fell 59% in the nine months to the end of September, retail revenue fell more with a 63% drop. As well as duty free specialists, the airport hosts luxury boutiques for names such as Chanel, Fendi, Louis Vuitton, Armani, Boss, Burberry, Harrods, Prada, Gucci and Charlotte Tilbury.

The airport’s cargo flights are also down and Heathrow has decided to keep Terminal 4 closed until the end of next year.

Holland-Kaye called on the government to continue offering business rates relief and to abandon its plans for tax-free shopping changes.

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