As a Canadian flying to Edinburgh and connecting at Heathrow, can I shop at duty free in Terminal 5 and bring onboard my connecting flight?
The cashiers will look at your boarding card (e-ticket) and will not be able to sell Duty Free to a passenger on a domestic flight. The flight number needs to be entered in the till. I don't know about T5, but at Gatwick in the DF shops there are some products on shelves marked as available to all passengers (Intra-EU, domestic & international). Check DF prices though 'cos duty free does not mean profit free, you may find it cheaper on the high st.
(I used to work in DF shop).
The law is that tax does not need to be paid on purchases by travellers leaving the EU. Travellers on flights inside the EU (including UK domestic) have to pay tax (VAT, and excise duty on things like alcohol or tobacco).
You are transit, but your onward destination from LHR is within the EU, hence you have to pay the taxes. Shops will ask for your boarding pass as proof of destination.
The 'Duty Free' store will obfuscate this somewhat; some items have different prices for EU and non-EU travellers (or they will refuse to sell to EU travellers). Other items are priced the same for EU or non-EU, and the store will pocket the difference if you are travelling outside the EU. It is worth comparing prices with simply buying in a UK shop - 'Duty Free' items are often heavily marked up because travellers think they are getting a bargain.
(I'm unclear if you're going to be transiting somewhere else in the EU - eg LHR-CDG-JFK but, since you could abandon your trip at CDG, I suspect you will be classed as EU)
Airlines will typically allow items in the airport's supplied carrier bag in addition to your carryon allowance, but this is may vary. For actual duty free items such as alcohol, typically the bag will be sealed and should not be opened until your final destination.
It probably depends a lot on what you buy / in what shop. Some shops give the same price to all shoppers.
- If you are leaving the EU, they will just not charge, collect or pay the VAT.
- If you are not leaving the EU, they will apply an equivalent discount (about 16.6%).
This is of course only possible for items with high margin, mostly luxury items, and is dependent on each store's policy.
Specific rules may apply to things like cigarettes.