The Government is planning to give mayors the power to introduce a holiday tax, according to The Times. The move would allow local authorities to charge visitors to fund transport and services.
If implemented, it would mark a U-turn just two months after Sir Chris Bryant MP, then tourism minister, told the House of Commons the Government “had no plans to introduce a tourism tax”. James Murray MP, then exchequer secretary, also said in a letter to UKHospitality that the Government had no such plans.
The tax would be a policy shift for England, which has not historically charged such a levy, unlike Scotland and Wales.
Brits took over 89m overnight trips in England in 2024 and stayed for a total of 255m nights, according to Visit Britain. A 5% holiday tax would cost the public £518m in additional tax.
Holiday taxes are charged to consumers on top of accommodation prices, like VAT. The combination of 20% VAT, a 5% holiday tax, plus the VAT charged on the tax itself, would create an effective 27% VAT rate for consumers on their holidays, making it one of the highest in Europe.
While many European cities charge a tourist tax, they also charge a lower rate of VAT for hospitality. That would not be the case in England.
Kate Nicholls, chair of UKHospitality, said: “If this is true, it would be another shocking U-turn from a Government who committed in the House of Commons only two months ago that it would not introduce a tourism tax, and in fact promised the industry the same thing in writing.
“We need to get consumers spending. Hospitality cannot foot the bill for the rest of the economy yet again.”