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‘Holiday Tax Bill’ will cost jobs and hike prices for families

November 4, 2026

‘Shocking’ decision to give Mayors uncapped holiday tax powers will hit family breaks and hospitality jobs.

The Government’s Bill to introduce a holiday confirms that Mayors and strategic authorities will have uncapped powers to introduce a holiday tax, with no legal requirements to even use funds raised to support hospitality, tourism and the visitor economy.

UKHospitality has said the holiday tax will force hard-working families to pay more for their holiday in order to prop up local government finances.

Not only will families be hit, but so too will workers, like builders, who need to stay overnight when they’re on a job away from home, parents going to visit their children at college or university, or relatives that may need to travel far from home to visit a sick relative.

Independent economic analysis by Oxford Economics found a 5% holiday tax would cost 33,000 jobs, increase tax for holidaymakers by £1.6 billion and cost the Treasury almost £700 million.

Allen Simpson, Chief Executive, UKHospitality

Allen Simpson, Chief Executive of UKHospitality, said: “It’s genuinely shocking to see the Government bring forward legislation to hike the cost of a family holiday and risk 33,000 jobs, because that’s exactly what its Holiday Tax Bill will do.

“Mayors will be able to introduce an uncapped holiday tax on Brits and then spend the funds on whatever they like, with no legal requirements to even use the funds to benefit hospitality.

“It is hard-working families that will be forced to pay more for their summer break to prop up local government finances. It is people in coastal and rural communities that rely on hospitality and tourism who will lose their jobs.

“It is not normal to have this level of taxation on a holiday. The UK’s 20% VAT is already the third highest in Europe, and this holiday tax will make it even worse.”

Impact

According to Oxford Economics, and assuming the impact of a 5% levy is fully realised by 2030, the impact on the economy and consumers would be stark:

    • Reduction in GDP of £2.2 billion
    • £1.6 billion tax increase for holidaymakers
    • £688 million in reduced tax receipts to the Treasury
    • A loss of £101m in direct investment from hospitality and tourism businesses.
    • £1.8 billion reduction in tourism spending
    • 11.9m fewer nights spent in accommodation
    • 33,000 jobs lost.

Unpopularity

Polling of 10,005 adults across Great Britain for UKHospitality, in partnership with Butlin’s, Haven and Hilton, by Stack Datra Strategy showed:

    • Twice as many people oppose the Government’s proposed holiday tax (56%) as those who support it (24%).
    • Voters are nearly 10 times more likely to punish an MP who backs the holiday tax than back them at the ballot box, threatening the Government’s majority in 200 seats.
    • MRP modelling shows a majority oppose the tax in 574 of 632 GB constituencies.
    • One-in-five Brits would be stopped from booking a holiday in England as a result of any increase to the cost of a break from the holiday tax, at a time when the cost-of-living is hitting harder than ever.

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