Proposed tourist tax is the wrong policy at the worst time

The sector is already facing sharp increases in employment costs and business rates following the 2026 revaluation, with some accommodation businesses seeing rateable values nearly double, leaving little scope to absorb new charges without damaging growth and investment.

UKHospitality has also cautioned that a levy would raise the cost of holidays as households continue to face cost‑of‑living pressures, as well as impact business and events travel, raising costs for employers and risking reduced demand for conference, exhibitions and businesses. With the UK already applying one of the highest VAT rates on accommodation in Europe, additional charges risk undermining international competitiveness and discouraging domestic breaks, particularly for families and young people.

The trade body has raised serious concerns about how a levy would operate, warning that different approaches across mayoral areas could create a confusing patchwork of rules and higher compliance costs for multi-site operators. UKHospitality argues the proposal fails key principles of accountability and transparency and says any levy must follow a nationally consistent flat-fee model with rates tiered by price, with revenues ring-fenced for the visitor economy, at least twelve months’ notice for businesses, and support to cover compliance costs.

Kate Nicholls, Chair at UKHospitality, said: “This is the wrong policy at the worst possible time. Accommodation businesses are already battling enormous cost increases and declining confidence. Adding a new tax on to family holidays, business travel and international tourism will strangle growth, reduce investment and put jobs at risk.

“A tourist tax will make England less competitive internationally and hit the very visitors the Government says it wants to attract. While we urge Government to rethink this policy entirely, if it does go ahead, it must be designed in the least damaging way, with national consistency, a simple flat-fee model, and receipts used for the benefit of hospitality and tourism, alongside genuine involvement from the businesses expected to deliver it.”