Holiday tax impact report

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Oxford Economics - holiday tax economic modelling report

Modelling by Oxford Economics, commissioned by UKHospitality, lays bare the devastating impact a holiday tax in England would have on holidaymakers, businesses and the economy.

The modelling by Oxford Economics considered three separate scenarios: a 5% levy on accommodation, a £2 levy per person per night, and a £2 levy per room per night.

All scenarios result in a reduction in GDP, tourism spending, nights spent in accommodation and total jobs.

Impact on the economy and consumers:

1
GDP
5% levy: £2.24 billion reduction

£2 levy per person, per night: £1.06 billion reduction

£2 levy per room, per night: £496 million reduction
2
Tax increase (gross levy receipts)
5% levy: £1.6 billion

£2 levy per person, per night: £766 million

£2 levy per room, per night: £361 million
3
Tax impact to the Treasury
5% levy: £688 million loss

£2 levy per person, per night: £326 million loss

£2 levy per room, per night: £152 million loss
4
Direct investment lost
5% levy: £101 million less

£2 levy per person, per night: £48 million less

£2 levy per room, per night: £22 million less

Hospitality and tourism devastated:

1
Tourism spend
5% levy: £1.78 billion less

£2 levy per person, per night: £846 million less

£2 levy per room, per night: £395 million less
2
Nights spent in accommodation
5% levy: 11.87 million fewer nights

£2 levy per person, per night: 5.85 million fewer nights

£2 levy per room, per night: 2.73 million fewer nights
3
Jobs
5% levy: 33,000 jobs lost

£2 levy per person, per night: 16,000 jobs lost

£2 levy per room, per night: 7,000 jobs lost

Stop the holiday tax

Find our how much a holiday tax will add to the cost of your holiday, and write to your MP to oppose the tax.

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The wrong tax at the wrong time.

1
Increase the cost of living
At a time when the cost of living remains a major concern, this could add at least £100 to the cost of a typical family holiday.

That could be enough to change decisions about whether to holiday in the UK at all.
2
Impact competitiveness
The UK is already one of the least tourism price-competitive destinations in the world, ranking 113th globally according to the World Economic Forum.

Our sector faces a 20% VAT rate on accommodation, which is far higher than key European competitors.

Adding a new levy on overnight stays would only increase costs further and risk pricing visitors out of choosing the UK.
3
Hit Government tourism targets
The Government has set a target of 50 million international visitors by 2030. A new tax on staying in the UK sits uneasily with that ambition.