Hot Topic

Tourist tax

The government’s recent consultation on proposals to give Mayors - and potentially other local leaders - the power to introduce overnight visitor levies in England has caused consternation across the hospitality industry. If this tourist tax is introduced, it would follow similar measures in Scotland and Wales. Now those in the hospitality industry are worried about UK holidays becoming a damp squib. Here we look at visitor levies and their potential impact on the UK’s tourism industry.

Charge on overnight stays

The Visitor Levy (Scotland) Act 2024 granted Scottish councils the power to raise funds for tourist services and facilities by applying a charge on overnight stays in the country based on a percentage of accommodation costs.

Current proposals will give councils the choice of setting a fixed amount instead. Councils will also be given the option of setting different fixed amounts such as for different geographical locations, times of year or types of accommodation. 

There are multiple local authorities across Scotland pursuing plans for a Visitor Levy.

The Welsh Government has passed legislation that gives local authorities in Wales the ability to introduce a holiday tax.

The Bill will allow local authorities to introduce a levy from 2027.

Serious concerns

In England, industry group UKHospitality has raised ‘serious concerns about the timing and impact of the plans’ to introduce a levy.

It says the sector is already facing sharp increases in employment costs and business rates following the 2026 revaluation, with some accommodation businesses seeing rateable values nearly double, leaving little scope to absorb new charges without damaging growth and investment.

UKHospitality has also cautioned that a levy would raise the cost of holidays as households continue to face cost‑of‑living pressures, as well as impact business and events travel, raising costs for employers and risking reduced demand for conference, exhibitions and businesses.

The trade body has raised serious concerns about how a levy would operate, warning that different approaches across mayoral areas could create a confusing patchwork of rules and higher compliance costs for multi-site operators.

Wrong policy, worst time

Kate Nicholls, Chair at UKHospitality, said: ‘This is the wrong policy at the worst possible time. Accommodation businesses are already battling enormous cost increases and declining confidence. Adding a new tax on to family holidays, business travel and international tourism will strangle growth, reduce investment and put jobs at risk.

‘A tourist tax will make England less competitive internationally and hit the very visitors the government says it wants to attract. While we urge government to rethink this policy entirely, if it does go ahead, it must be designed in the least damaging way, with national consistency, a simple flat-fee model, and receipts used for the benefit of hospitality and tourism, alongside genuine involvement from the businesses expected to deliver it.’

Letter to the Chancellor

Over 200 hospitality and leisure CEOs have urged the government to scrap plans for a Visitor Levy in England.

In a letter to the Chancellor, they warn that the proposed holiday tax will ‘hit families hardest, put jobs at risk and drain money from local businesses and communities’.

Signatories to the letter warn that ‘holidays are for relaxing, not taxing’, with the proposed tax meaning tourists would face an extra £100 or more for a two-week holiday in the UK.

The letter says this could force families to shorten trips, skip travel altogether or head overseas, spending their money elsewhere.

The letter also says there will be significant damage to local communities across England that rely on tourism for survival, as fewer visitors mean fewer local jobs and lower spending at local businesses.