Brexit will boost travel retail as duty free makes comeback

As work begins on hashing out a deal for the UK to leave the EU, the UK ferry industry is hopeful that its departure will provide a welcome boon for the travel retail sector, paving the way for the return of duty-free shopping on board for the first time in 20 years.

Duty free shopping was abolished for travel between EU countries in 1999.

Currently, ferries travelling between EU countries have to obey EU tax rules, imposing duty upon all purchases. However this will likely come to an end after Britain leaves the EU.

The British Chamber of Shipping, which represents cross-Channel ferry operators, has said it will slash the price of wine and spirits on board “automatically” when Britain leaves the EU, giving Brits the chance to purchase wine and spirits at duty free prices on board, returning to the system of the 1990s.

Duty free shopping was available at airports and on cross-channel ferries until 1999 when duty free was abolished for travel between EU countries. Since then passengers have only been able to take advantage of “tax-free” shopping, free of VAT, and duty free shopping only if travelling outside of the EU.

Currently, UK duties add £2.16 to bottle of wine, £7.54 to a bottle of spirit and 43p to the cost of a pint (WSTA figures), all of which will be knocked off the price of alcohol sold onboard ferries, and airports, potentially along with VAT, knocking another 20% off the price on top.

Before 1999, the “intra-EU duty free” system of the 1990s was worth £391 million a year to the ferry industry, according to The Telegraph.

Speaking to The Telegraph Guy Platten, chief executive of the UK Chamber of Shipping, said the return of duty free shopping on board ferries could be a “game-changer” for the UK ferry sector.

“Nearly 40 million people a year travel on ferries to and from the UK and it continues to be a convenient, safe and cost-effective way of travelling. But over the years a number of regulations and changes have damaged the industry’s competitiveness, not least the removal of duty free.

“Leaving the European Union may well give us the opportunity to get that back. The Government has said Britain is open for business, and that leaving the EU does not mean cutting ourselves off from the world. Promoting travel and tourism should be at the heart of its strategy, and restoring duty free would send out a strong and welcome message.”

However while the UK leaving the European Union could be a positive step for the travel retail market, it does come with some drawbacks.

Currently, as a member of the European Union, British citizens are able to travel to any country within the EU and bring back as much wine or spirits as they like. Sold at cheaper duty and tax rates when compared with the UK, there are bargains to be found across much of the continent.

However after leaving the EU the amount of wines and spirits that can be brought back into the UK will be limited to one bottle of spirits (one litre), two bottles of fortified wine (two litres), four litres of ordinary wine and 16 litres of beer.

So while the booze may become cheaper, the quantity allowed will be reduced. This means the days of the “booze cruise”, whereby bargain-hunting Brits could hop across the channel and return with a trunk load of booze, in excess of the legal limit, will become illegal.

READ MORE: The Wine Society to shut French ‘booze cruise’ shop