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Friday, April 26, 2013

Claiming back 20 percent sales tax after travelling in the UK

Retail sales taxes are higher in the U.K. than in the U.S.
Some retail sales qualify for up to 20% cash back

Think of travelling to the UK and the first things most people come up with are the sights- Big Ben, Westminster Cathedral, bright red London Buses, and maybe the 2012 Olympic Stadium. Of course there is plenty more to the UK. London alone sees about 15 million visitors per year, and they have a huge range of reasons for coming.

Great shopping is high on the list. From world-famous retailers like Harrods and Selfridges through to quirky markets districts specializing in everything from antiques to punk fashion, London is a shopper's paradise. There's just one problem- almost everything a visitor might want to buy includes a hefty 20% sales tax in the price. In the UK this is known as VAT.

UK and European Union residents have to pay this 20% VAT, but the good news is that visitors from outside the EU don't. You can claim it back when you leave the UK or the European Union. It's not difficult to do but does require some extra planning, so next time you visit Britain, follow these steps to make sure you get your tax back:

1. Choose your store

When deciding where to buy, look for the 'Tax Free Shopping' sign. These retailers know how to help you get VAT back and most are happy to help travellers fill in the right forms. You can find a list of stores on the GBTax Free website, or just keep an eye out for the sign, especially in London shopping districts.

2. Show your passport

You'll need to show your passport at the store to prove that you're eligible to shop tax free, so don't leave it behind at your hotel. They'll help you fill in the necessary form- a VAT 407- right there and then. You can also decide how to receive your refund at the point of purchase.

3. Keep your papers

Make sure to keep those forms and all receipts somewhere safe- you'll need them later.

4. Declare your purchases when leaving

When you leave the European Union (whether from the UK or from another EU country if you're travelling on to another European destination), make a customs declaration. You'll need to show the officials your completed forms, receipts, and the actual purchased goods themselves.

5. Submit your forms

Once through customs, you might either mail your form off or hand it in at a special tax refund booth, and then your money can arrive through the channel you nominated in store when filling in the forms.

That might seem like a lot of extra work but 20% can amount to a fairly significant sum of money. Spend $400 on taxable goods and your refund should come in around $80.

For more information, including the fine print, see the UK Revenue and Customs page on this topic. 

 Image attribution: Elliott Simpson; CC BY-SA 2.0