Real-life money: can a New York shopping trip pay for itself?

It's a whole lot cheaper to buy products in the US compared to the UK. We see if the savings could pay for a shopping trip to the Big Apple.

Reena Sewraz recently went to New York with her boyfriend. While she was there she noticed how much cheaper it was to buy everything from electricals to clothes.

When she came back she crunched the numbers to see if a shopping trip to the Big Apple could pay for itself in terms of savings.

Here's what she found out.

What savings can be made?

New York only has a sales tax of 8.875%, compared to the 20% VAT we pay in the UK, and the favourable exchange rate means you get even more bang for your buck.

Here's a luxury his and her Christmas wish list to see what the items would cost to buy in New York compared to the UK.

One of the best places to go for holiday cash is Thomas Exchange. Right now it's offering $1.50 to the pound.

Based on this rate I’ve worked out the total savings on the selected products would be £283.67. That’s pretty decent considering the brands and designer names involved.

Also remember that you can cut out some of the exchange rate worries with a credit card that doesn't charge you a fee for use abroad.

[Related story: 6 things that cost much more in the UK than abroad]

Customs Duty and VAT

Something Christmas shoppers should bear in mind though is that UK residents are only allowed to bring back goods worth up to a total of £390 for personal use without paying Customs Duty or VAT.

The rules say you have to pay a flat Customs Duty of 2.5% over your allowance up to £630.

Above £630 the rate may vary by the type of goods you buy. All goods over the £390 limit may also attract a 20% VAT charge depending on the item.

While any single item worth more than your allowance will have the duty and tax applied on the full value not just the amount above the allowance.   

The products in my luxury Christmas basket amount to £777.33 once converted which means I would be above the limit. With the 2.5% charge that amounts to £9.68 to pay.

But if Import VAT is applied there’s an extra £77.46, which will diminish the savings.

Most get around this by unboxing the items and wearing or taking off labels of what they buy to avoid declaring it.

This might be something you are willing to risk. But if you are stopped going through customs in the UK you could end up in trouble.

To ensure you always make a saving it makes sense to only go for items that offer at least a 22.5% saving.

For more check out the HMRC website.

Cutting the cost of flights

To make the trip pay for itself it’s important to try to save big on getting there.

Transatlantic flights are generally pretty pricey, but they have got a lot cheaper thanks to the emergence of budget flights from airlines like WOW Air and Norwegian.

WOW Air recently offered £99 flights to the US, while in the past Norwegian has offered £149 flights to New York. If you can bag one of these you’re quids in, but they tend to disappear very quickly once they’re launched.

As there were no super cheap flights to be had, I took to flight comparison site Skyscanner. The cheapest flight I could find from London to New York between December 4 and December 6 for a quick Christmas shopping break was £302 with Norwegian.

[Related story: From flights to packages, how to have a cheaper holiday]

Cutting the cost of a hotel

The other big saving to try to achieve will be on where you stay. Unfortunately, when it comes to hotels, New York is notoriously expensive.

But there are a few decent budget chains located in Manhattan to consider that will set you up near 5^th Avenue, Macy’s, Bloomingdales, Madison Avenue and the rest.

Popular brands include Hampton Inn, Pod, Holiday Inn, Comfort Inn and the Hilton Garden Inn. Of course there are also loads of much cheaper deals if you’re prepared to stay in a really basic room.

Using Hotels.com the cheapest price I could find for two nights from Friday December 4 to Sunday December 6 was £110 at the New World Hotel on the Lower East Side in East Village. The room looks pretty depressing and the reviews aren’t too flattering, but it would do as a base to get some shopping done.

It’s also worth giving airbnb a look to see if you can get a place to stay on the cheap. It might mean somewhere much nicer but you’ll probably have to share with a host.

Searching over my shopping dates the cheapest I found a room for two nights was £145 on the Upper East Side.

Can you make a New York shopping trip pay for itself?

Given how cheap it is to fly at the beginning of December and the ability to get a basic hotel room it does look like you can make a Christmas shopping trip to New York pay for itself, but after including the charges that you could be hit with it is less certain.

If I were to book right now I would spend £412. Based on the shopping basket I would save £273.99 if only Custom Duty is applied.

So the savings could cover over half of the cost of the trip.

Other things to consider

While it’s possible to offset the cost of getting to New York with the savings there are other things to consider.

The flight is long-haul and will take around seven hours. As the UK is five hours ahead you gain time on the way there, but you’ll lose it on the way back.

You also need to factor in food (which if you’re eating out means tipping), getting around (the subway is a lot cheaper than taxis) and getting to and from the airport on both sides of the Atlantic.

But as long as you can keep these costs under control, you should be able to make some savings to brag about and have a great mini trip to boot.

If you aren’t too bothered with a trip to New York, you can also try and get these savings from the comfort of your living room by shopping on US websites. But Customs Duty and VAT charges apply on the purchases delivered by post too and have a much lower threshold than when you bring them into the UK personally.

Check out the HMRC website for more.

Don't pay a fortune to spend abroad: compare credit cards that don't charge foreign fees