Travellers in the UK may soon face a holiday tax for up to a month, according to plans revealed by the government. New legislation outlines the potential for an Overnight Visitor Levy, which regional mayors could impose on stays in hotels and bed and breakfasts.
The charge would be calculated as a percentage of the accommodation cost. Labour-run areas are expected to set this rate at 5 percent. The first 28 days of a continuous stay would be subject to the levy. This contrasts with Edinburgh, where a similar levy is capped at five consecutive nights.
Accommodation owners, including those operating Airbnbs and guest houses, could face fines of up to £500 if they do not maintain proper guest records. Local authorities are also to be granted powers to check if the tax is being paid.
Proponents of the levy, such as the Mayor of London, Sadiq Khan, argue that it would provide local leaders with greater freedom to generate and invest funds locally, potentially benefiting high streets, public spaces, and tourist attractions. However, there will be no legal requirement to allocate these funds specifically to tourism-related improvements.
Critics, including UKHospitality, have expressed concerns that the tax will increase the cost of family holidays and potentially jeopardize jobs in the hospitality sector. Allen Simpson, chief executive of UKHospitality, stated that the tax could lead to families paying more for breaks to support local government finances, and could impact jobs in coastal and rural communities reliant on tourism. He also noted that the UK's existing VAT rate on tourism is already among the highest in Europe.
The Conservative party has also voiced opposition, suggesting the tax would burden individuals who can least afford additional expenses for travel. Shadow communities minister David Simmonds raised concerns that the levy could inadvertently affect volunteer-run organizations like Scout and Guide groups, even when operating on tight budgets.
Some regions in the UK already have visitor levies. Andy Burnham introduced the first holiday tax in Greater Manchester in 2023, and Liverpool has a similar rate. Edinburgh implemented a 5 percent charge in the summer, and Cardiff is set to introduce a £1.30 per night levy. The proposed national plans, however, would extend these powers to England's 14 regional mayors, potentially from 2028.