British holidaymakers choosing to stay in the UK could see the cost of their breaks rise by as much as £112 by 2030, following government plans to allow local councils to impose additional charges on guests. The proposed 'local overnight visitor levies' have been strongly criticised by UKHospitality, the trade body representing the hospitality sector, which warns the move could 'decimate' tourism across the country.
How the Tax Would Work
The government intends to grant Mayoral Strategic Authorities in England the power to introduce what they term 'local overnight visitor levies' – effectively a tourist tax. A consultation on the proposal, which sought views on which types of accommodation should be included and how the revenue would be spent, concluded in February. Some UK cities, including Edinburgh, Manchester, and Liverpool, already operate similar schemes. Liverpool's tax is set at £2 plus VAT per room per night, while London is considering a 3% levy proposed by Mayor Sadiq Khan, which could generate an estimated £350 million annually and, according to Khan, 'directly support the capital's economy'.
Impact on Families
UKHospitality has highlighted that even a modest levy could quickly accumulate for families staying in the UK. A charge of just £2 per person per night would add £56 to a week-long holiday, or £112 for a fortnight in self-catering accommodation or a hotel. However, exemptions may be possible; in Venice, for example, children under 14 are exempt from the overnight accommodation fee. Under such a model, a family of two adults and two children would pay only £28 per week instead of £56.
Rising Costs and Industry Concerns
According to VisitBritain, the average cost of an overnight domestic trip rose by 5% between 2023 and 2024, reaching £107 per night. A 3% levy on this would amount to £3.21 per night, while a 5% tax would be £5.35. Allen Simpson, Chief Executive of UKHospitality, said: 'A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism. There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs and taxi firms, the impacts are stark and indiscriminate. Taxes up, jobs lost and our high streets hit once again. Holidays are for relaxing, not taxing. The Government should keep it that way and stop the holiday tax.'
Support from Local Authorities
Despite industry opposition, the extra revenue-raising powers are likely to be welcomed by local authorities. The Institute for Government noted: 'This will provide mayors with a new source of revenue to invest in local growth and support regeneration. Many mayors have long called for such a power, so the chancellor’s confirmation that this will happen will be welcomed as an important first step towards fiscal devolution.'
Broader Context
The situation in the Middle East may also influence travel patterns, with some holiday companies reporting a 235% increase in bookings for UK destinations as travellers opt for staycations over trips to places like Dubai and the Maldives. While staycations can be expensive, experts suggest cutting costs by travelling during shoulder seasons or choosing lesser-known destinations over popular spots like Cornwall and the Lake District.
