Campaigners warn that the "great British staycation" could be in danger if new taxes are introduced, forcing visitors to pay a levy for each overnight stay. Labour is committed to introducing an "overnight visitor levy" (OVL), which would allow mayors and potentially other leaders to tax people staying in their region.
South West to Bear Brunt of New Tax
The Taxpayers' Alliance (TPA) has calculated that the South West of England would take the biggest hit if the levy is rolled out. Its analysis suggests that if a levy had been in place in 2024, the South West would have suffered £450 million of "economic damage" from the loss of domestic holidaymakers.
Allen Simpson, Chief Executive of UKHospitality, told the Sunday Express: "Holidays are for relaxing, not taxing." He warned: "The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism."
Industry Voices Raise Alarm
Jonathan Eida of the TPA said: "An overnight visitor levy is little more than a holiday tax that punishes families, damages local businesses and holds back growth. Tourism-dependent communities rely on visitors spending money in their pubs, restaurants, shops and attractions, but piling another charge onto the cost of a break will mean fewer trips, shorter stays and less spending. Ministers should be making it easier and cheaper to holiday in England, not risking billions of pounds of economic damage with yet another tax."
Shadow Chancellor Sir Mel Stride also sounded the alarm, saying: "Labour's holiday tax is a tax on working people taking a break in their own country. It means higher costs for families, less money in local economies, and more pressure on already struggling businesses – a blow for seaside towns and a hit to families. At a time when people are counting every penny, Labour is choosing to make holidays more expensive. Rachel Reeves should scrap it - and keep her hands off our holidays."
Regional Economic Impact Breakdown
According to the TPA's calculations, London would have taken a £259.9 million hit, followed by the North West (£225.4 million), Yorkshire and the Humber (£190.1 million), the South East (£184.6 million), the East of England (£166.4 million), the East Midlands (£107 million), the West Midlands (£77.6 million), and the North East (£48.2 million).
The TPA argues that "areas that rely heavily on holidaymakers are likely to be most vulnerable" because "unlike business travel, holidays are discretionary, meaning visitors are more likely to change their plans, shorten their stays or spend less when additional costs are imposed."
Small Businesses and Holiday Parks at Risk
Craig Beaumont of the Federation of Small Businesses said: "Imposing visitor levies in England would be a tax on growth. It would drive visitors elsewhere, create a huge admin burden, and pile yet more pressure onto the thousands of small hospitality and accommodation businesses that depend on tourist footfall [and keep] their local economies going."
A spokesperson for the National Caravan Council (NCC) warned: "Holiday parks, predominantly located in rural and coastal communities, provide affordable breaks for millions of families in England, but visitor levies risk pricing more families out of taking UK holidays… [The] UK already applies one of the highest rates of tax on visitor accommodation in Europe – with a 20% VAT rate. Now is not the time to introduce new taxation that could discourage visitors, damage the wider tourism economy and undermine the appeal of the great British staycation."
Government Defends Levy Plans
A Government spokesman insisted the levy is intended to allow local leaders to reinvest in the areas and any changes are expected to be modest. Responding to the concerns, he said: "This is speculation because the final design of the visitor levy has not been decided. The levy will mean local people benefit even more from tourism to their area and mayors will be able to invest in local priorities."
