Drowning in a vat of VAT!

What is VAT? Can I Get a Refund?

VAT, or Value Added Tax, is something levied on goods and services in many countries. In the UK, the VAT runs 20% and is included in the of your purchase. So, if you see a candy bar for £1, what you see is what you get! The nice thing is, you can get that 20% refunded to you on certain purchases after you leave the country. This article will clarify a few points on VAT and when you should seek a refund.

Who is Eligible?

• Non-EU citizens
• People leaving the UK/EU for a foreign country
• People traveling with the goods
• EU citizens who are travelling from the UK to a country outside the EU and will remain outside of the EU for at least 12 months.

What Products are Charged VAT?

Some things are exempt from VAT refund. These include (from the government website):

• goods (for example, perfume or chocolates) which you have used, or partly used, in the EU
• motor vehicles and boats
• goods over £600 in value that will be exported for business purposes (you have to use a form C88 for these)
• goods that will be exported as freight and goods that need an export license (except antiques)
• unmounted gemstones and bullion (over 125 grams)
• mail order goods including Internet sales
• any services, for example, hotel bills
• postage stamps
• financial and property transactions.

The list of goods and services included and excluded from the tax is long and a bit arduous to get through. Basically, if you go in a shop and buy something like shoes, a dress, or gifts they will include VAT and you could claim a refund (but the items can’t have been used and must still be in the original state with tags). If you’re staying in a hotel or B&B, you will be charged VAT, but cannot claim a refund. You can research the government website at this link for more information. Your food, drink, lodging, and transportation are typically not VAT-refundable.

The final refund will consist of the VAT total, minus an administration fee. In some cases, a cash refund fee may apply. This can be direct deposited or placed on a credit card.

What Paperwork do I Need to Get a Refund?

When you walk into a store and purchase an item, ask not only for the receipt, but for a VAT form. This form must be filled out before your departure. Buy from stores that handle VAT-refund paperwork. Most stores that do this post a “Tax Free” or similar sign somewhere on a door or window; big department stores often have special VAT offices.

Where do I Go for my Refund?

You may only get your VAT refund from the Customs/Travelex offices located at Heathrow and Gatwick Airports. At other airports or ports there is a Customs box where the Tax Free Forms should be left for stamping. Follow the signs at the airport to claim your money. For jewelry or electronics worth under £250 , you must get a customs stamp at the Customs office before entering Security. If you’re claiming for jewelry or electrical items worth over £250 and the item can be placed in your hand luggage, you must visit Customs after Security. Be sure to bring a passport, purchased items, and boarding pass with you. Make sure the goods are sealed and unused.

What Should I Really Claim vs. What I’m Allowed to Claim?

There are stores that don’t participate in the VAT refund scheme. Different shops have different minimum purchases (normally about £75 in any one shop). Everything must be in its original packing, must have all the paperwork, and must be carried to Customs.

A lady in front of me in line one day had bought a Rolex and was wearing it on her wrist. Even though she had the paperwork, she wasn’t allowed to claim the VAT for her purchase because it wasn’t in its original box.

TIP: I say claim only high dollar items. Collecting VAT is too much of a hassle otherwise!

Shipping and VAT

You can’t claim VAT at the post office before shipping your purchases. If you’re a business and the purchases are business related, you should check international business arrangements. However, if you’re a tourist, your best bet is to find larger stores that ship to the U.S. These stores won’t charge you VAT, but you will be charged a shipping fee (basically nulling the VAT you would have paid by not shipping). I’ve done this several times from the pottery stores in Stoke-on-Trent.

When Do I Get My Money?

Repayments usually occur within 10 working days and are direct deposited. If you haven’t received anything within 21 days, you may be due a repayment supplement. This supplement is £50 or 5% of your repayment – whichever is the higher amount. For further information about reimbursement, click here.

The Gotchya’s

• Many times the custom lines are very long and paperwork takes time to process. Remember, without a Customs stamp you’re not eligible for a refund.
• People who forget and use the object before they leave the country. The items must be “new in box” with all tags intact. Never worn.
• VAT and the EU was difficult enough with many people losing their refund when traveling to other countries. However, with the advent of Brexit, we’ll see how it affects trading and VAT refunds for your UK visit. According to About Travel, it may take several years to iron out the details and VAT should be the same as it was under the EU in 2017 (the date of this article). Watch this space for changes and be sure to check the government’s website for further information on VAT refunds.

For an excellent document on VAT (especially if you’re leaving from Heathrow), click here.