Duty-free sales of cigarettes and alcohol would be re-introduced if the UK leaves the European Union in a no-deal Brexit on October 31.

Holidaymakers travelling to countries in the European Union would pay no excise duty if Britain leaves the EU without a deal, the Treasury announced.

The travel sector has been calling for the reintroduction of the tax benefit since the EU scrapped duty-free sales within the single market 20 years ago.

Duty-free shopping at airports is exempt from duty or VAT, which is set at 20%. But the saving is only available to passengers flying outside the EU.

UK excise duty will no longer be due on alcohol and cigarettes bought when leaving from the UK to Europe. A bottle of wine purchased in a Heathrow duty-free shop on the way to the EU could be up to £2.23 cheaper, according to the Treasury.

The change will not apply to return journeys from EU countries, which also have limits on the amount of duty-free items travellers can bring in to ensure they are for personal use.

Chancellor Sajid Javid said: “As we prepare to leave the EU, I’m pleased to be able to back British travellers.

“We want people to enjoy their hard-earned holidays and this decision will help holidaymakers’ cash go that little bit further.”

The return of duty free will only apply if Britain leaves the EU without a deal because under the terms of the withdrawal agreement the UK would stay in the single market and the customs union for the duration of a transition period, and this means keeping the current system in place.

The UK would have to decide at the end of that period whether to remain aligned with EU rules on duty free. But leaving without a deal gives the government the freedom to set its own rules.