Ministers have been urged to reinstate tax-free purchases for international visitors to make the UK a ‘global shopping capital’ and help the country benefit from its position outside the EU.

“With Britain no longer in the EU, we have the opportunity to become the best place in the world for shopping,” Derrick Hardman, chair of Association of International Retail (AIR), said.

Hardman said that while the EU offers tax-free shopping to international residents, Britain’s position outside the bloc allows it to offer the perk to all 450m EU residents.

The scheme would offer a £3.7bn annual benefit and deliver at least 73,000 new jobs, according to new research.

“This would give Britain an unchallengeable competitive advantage within Europe.

“In addition to levelling the playing field with our EU competitor destinations who all offer VAT refunds to non-EU visitors, Britain would have the unique opportunity to create a whole new, shopping-led, EU tourism market,” Hardman said.

Under the tax-free shopping scheme, which then-chancellor Rishi Sunak scrapped at the beginning of 2021, visitors could reclaim the VAT paid on their purchase at 20 per cent of the price.

Retail businesses and a host of airports have since pleaded for the government to reinstate the tax break, with wealthy international shoppers choosing to splash their cash elsewhere.