What is Tax Free shopping?
Value-added tax (VAT) is a 20% sales tax levied on most goods in the UK. If you live outside the EU and are travelling to the UK for business or leisure, you could be eligible for a VAT refund.
VAT is included in the sale price for most goods in the UK, therefore, it is not normally possible to avoid paying tax at the time of purchase. Instead, you’ll need to claim a tax refund. In some stores, you can request an in-store tax refund form, or manage the process electronically on your mobile phone.
Are you eligible for VAT refund?
Yes, if you are a non-EU national visiting the UK.
EU expats living outside the EU for 12 months or more are also eligible for VAT refund. Note that you will need to provide proof of your non-EU residency e.g. foreign visa, residence permit, or evidence of occupation when you fly out.
Anyone studying or working in the EU can get a tax refund on purchases made in the final 3 months before permanently leaving the EU, so make sure you time your big tax free purchases well. Remember you will need to demonstrate at the departure airport that: 1) you are not returning back to the EU for at least 12 months, and 2) that your work or study has ended.
Which purchases are eligible for VAT refund?
To claim for a VAT refund, purchased items should be for your own personal use and taken back home with you in your luggage. You must take your tax free goods out of the EU within three months of purchase, and because you need to be in the shop in person, online shopping is not eligible for VAT refund.
There are also restrictions on what type of purchases are eligible for a tax free shopping. Most basic food items, children’s clothes and books are already 0% VAT – so getting a refund isn’t possible.
Keep an eye on your receipts too, because even though you’ll see a VAT amount stated, services such as hotel bills or restaurant meals don’t quality for a tax refund. As rule of thumb for what is eligible, if you can’t put your purchase in your luggage and show it to a customer’s officer at the airport, chances are it’s not eligible for tax free shopping.
How does Tax Free shopping work?
Retailers offering tax free shopping will provide you with a VAT refund form. Not all shops participate in the tax free shopping scheme, and there is usually a minimum-purchase condition of around £30 in any one shop. Alternatively, to avoid these restrictions, you can complete the refund process electronically via the AIRVAT mobile phone app.
On request from the participating shops, or via AIRVAT, you will receive a special VAT refund form, which must be presented with the purchased items to customs at the airport when you depart. Please note: VAT-free goods can’t be posted or shipped home.
You will need to Present your unused goods in their original packaging for inspection, and have your tax-free form stamped by Customs before departure. Ensure that your tax free form is completed correctly before presenting your passport and boarding pass. Be warned that goods that you’ve already used in the EU, such as opened perfume bottles, are not eligible for VAT refund.
Where do I need to go at the airport?
Make sure to leave enough time before your departure to get your tax free form stamped, as there could be queues, especially at peak hours.
There are usually Customs desks before and after Airport Security. At London Heathrow, the Travelex VAT refund desk issues tax free form authorisations on behalf of Customs. If you have items that you’d like checked-in, head to the customs desk before security to get your tax free form authorised. For high-value items worth more than £1,000, or valuables such as jewellery, sunglasses or portable electronics, you will need to take these items to the customs desk once you have passed through security, therefore, these items should be placed in your hand luggage.
Tip: the wait at the Customs desk after Security is usually less than 15 min long. So, if you have not checked-in your tax free shopping items, it can be faster to have the VAT refund form validated after Security.
Authorised Tax Free form sample
Getting your VAT refund
Typically, there will be an administration fee for tax free shopping service so do not expect to receive the full VAT amount. The fee is more expensive for the in-store service. However, you can receive more of your refund by completing the process electronically on your mobile phone.
You may need to wait up to 10 weeks for your tax refund to come through. There are two ways to get your VAT refund faster, but each carries additional fees, so if you are not desperate to get back your VAT quickly, it is better to wait to receive the refund on your account after your return home.
Firstly, some of the larger retailers in central London would offer a cash VAT refund immediately in-store. Be aware that this carries an additional charge of around £3.50 per receipt and still requires you to complete the Customs authorisation at the departure. If you later don’t for whatever reason stamp your tax free form, the refund company will charge back the VAT refund amount less an additional admin fee.
Secondly, airport agents often offer Cash VAT Refund in your preferred currency after Customs have authorised your tax-free form. Be wary though, as such service will carry an additional fee and will be subject to poor airport currency conversion rates costing further 10-20% refund reduction.