Growing fears over a potential 'tourist tax' are casting a shadow over the UK's upcoming Autumn Budget, with concerns that holidaymakers could be charged for every night spent in a hotel or holiday let.
A Surprising Government U-Turn
The proposed surcharge, which is expected to be outlined in the Treasury's Autumn Budget, would represent a significant reversal of the government's previous position. Just months ago, Tourism Minister Chris Bryant explicitly told MPs that the Government had "no plans to introduce a tourism tax." If implemented, the levy could be delegated to local mayors, potentially raising millions of pounds in popular destinations such as London, Manchester, and Birmingham.
The Financial Impact on Holidaymakers
The financial implications for travellers are substantial. Analysis suggests the new charge, when combined with the existing 20% VAT and VAT on the tourist tax itself, could result in an effective tax rate of 27%. Based on current travel patterns, this policy could cost holidaymakers more than £500 million in additional spending. Brits alone take approximately 89 million overnight trips within England each year, accounting for a total of 255 million nights.
Industry Backlash and Economic Warnings
The hospitality industry has reacted with alarm. Kate Nicholls, Chair of UKHospitality, labelled the potential move as "another shocking U-turn" from the Government. She argued that the tax would effectively act as a higher VAT rate for holidaymakers, driving up prices, fuelling inflation, and causing consumers to cut back on spending. "Hospitality cannot foot the bill for the rest of the economy yet again," she stated, warning of potential job losses.
When questioned, a Ministry of Housing, Communities and Local Government spokesperson pointed out that local areas already have a mechanism to raise such funds, stating: "Places can already choose to introduce a levy on overnight stays through the Accommodation Business Improvement District model." The final decision now rests with the Treasury as the nation awaits the Autumn Budget announcement.
