UK families could see the cost of a two-week holiday rise by up to £100 after new tourist tax measures were confirmed in this week's Budget. Chancellor John Healey said England's mayors and other strategic authorities will have powers to introduce an overnight visitor's levy from 2028 in his statement on Wednesday.
The scheme will allow local authorities to charge holidaymakers an additional fee for overnight stays in hotels, holiday lets, B&Bs and holiday parks. UKHospitality has warned that the plans could hike the cost of a two-week family holiday by up to £100, if charged at £2 per person per night.
Industry warning over deterring visitors
Jon Hendry Pickup, CEO of seaside resort chain Butlin's, argued that "making UK destinations more expensive risks deterring the very visitors whose spending supports local communities". Mr Healey framed the tourist tax, alongside the devolution of business rates and some income tax revenue, as a way of enabling regions to invest in local infrastructure and creating "long-term funding streams".
Mr Pickup said: "If local areas are going to retain significantly more business rates revenue, alongside a share of income tax, the case for adding another tax on British families taking a holiday in their own country becomes even harder to understand." Gavin Taylor, CEO of the Clermont Hotel Group, also described the Budget as "very disappointing", suggesting the hospitality sector was being "unfairly penalised".
Local authorities to decide on adoption
Adopting the tourist tax will be at the discretion of local authorities across the country, with some Labour mayors already signalling their intention to do so. Labour mayoral regions expected to support the plans include Greater London, the West Midlands, Greater Manchester, West Yorkshire and South Yorkshire.
Parts of the country overseen by Conservative and Reform UK authorities may be more resistant, however. Reform's mayor for Greater Lincolnshire, Dame Andrea Jenkyns, has already said she will not be introducing the tax as it could "drive out" visitors. Conservative mayors for the Tees Valley and Cambridgeshire and Peterborough, Ben Houchen and Paul Bristow, have made similar statements.
Rate setting and revenue use
Local leaders across England will be given the freedom to set the rate of tourist tax if they choose to adopt it, with no upper limit imposed by the Government. Labour's metro mayors are thought to have agreed at a cap of 5%, however.
The revenue generated will go directly back into the local areas, and could contribute to public service costs, transport and investment in promoting culture and tourism. Manchester and Liverpool have already adopted tourist tax schemes via the legal work-around of their Accommodation Business Improvement Districts (ABIDs). The cities, which adopted a £1 and £2 nightly tourist charge respectively, both raised over £2million from the scheme in just 12 months.
