Tourist Tax Diverts Wealthy Visitors from London to Paris and Milan, Claims Cadogan Estates Boss

The UK's “tourist tax” is driving wealthy international visitors away from London to destinations such as France, Italy and Spain, according to Hugh Seaborn, chief executive of Cadogan Estates, one of London's largest landowners.

Seaborn, whose company owns 90 acres of prime land in Chelsea, including Sloane Street and King's Road, described the tax as “a special purpose for this country”.

Seaborn stressed that luxury brands, especially those on Sloane Street, are being significantly affected by the abolition of tax-free shopping, which allowed international shoppers to reclaim 20% VAT on purchases. “We have been very resilient and have recovered strongly (from the pandemic) but we have certainly been impacted by the tourist tax and we see that particularly with the luxury brands on Sloane Street, some of which are more reliant on the international visitor,” Seaborn said, noting that although high-end stores It is doing well, but London is losing international visitors to Paris, Milan and Madrid.

The tax-free shopping scheme was scrapped by Rishi Sunak while he was chancellor in 2021, a move estimated by the Office for Budget Responsibility to save the Treasury £2bn. Despite this, there have been persistent calls from retail and hospitality groups for the system to be restored.

Seaborn, 62, said the tax's impact extends beyond retailers to the broader economy, affecting hotels, restaurants and cultural attractions. “It's not just about shopping; He explained that (these visitors) stay in hotels and go to restaurants, theaters and museums. He stressed that the economic ripple effect reaches far beyond London, benefiting regions such as Northamptonshire and Scotland, known for the craftsmanship and materials used in luxury goods.

Luxury brands at Cadogan Estates, such as Audemars Piguet, Louis Vuitton and Tiffany, have particularly felt the impact. The area also includes many five-star hotels and upscale restaurants, all of which benefit from international tourism.

Seaborn pointed to ongoing efforts to advocate for the return of tax-free shopping, acknowledging the challenges the government faces. “There is some very strong advocacy with the government,” he said, adding that he and others are making the economic case for reinstating the scheme, even though politicians currently have “a lot on their plate.”

The debate over the tourism tax continues, with many claiming that its removal would enhance the UK's attractiveness to international visitors, and thus benefit the economy through increased spending in the retail, hospitality and cultural sectors.