Businesses strike back at proposed tourist tax: What could this mean for you?
More than 200 leaders from the UK’s hospitality and leisure sector have written to the Chancellor urging the Government to reconsider the proposed visitor levies.
Signatories included major accommodation providers such as Butlins, Haven, Hilton and Travelodge and the message was clear, “holidays are for relaxing, not taxing”.
With the school half-term upon us, many businesses are assessing what a tourist tax could mean for their future and how it could impact already tight margins.
What is the UK tourist tax being proposed?
At the Autumn Budget 2025, the Government announced that it would give mayoral authorities in England the power to introduce a visitor levy on overnight stays.
The charge would apply to hotels, B&Bs, guesthouses, short-term rentals, campsites and other paid accommodation.
Often referred to as ‘tourist tax’, the levy would apply to leisure and business travellers.
However, any businesses that benefit from tourism and holidaymakers could feel the impact, even though they themselves are not taxed.
Despite the backlash, councils have argued that the funds raised could support local infrastructure, public services and tourist development.
What charges are already in place in the UK?
Although consultations in England are ongoing, some cities already have local schemes in place.
This includes:
- Manchester introduced a £2 per night charge in 2023, raising £2.8 million in its first year.
- Liverpool followed in June 2025 with a £2 nightly fee, expected to generate £4.5 million annually.
In Scotland, the Visitor Levy (Amendment) was introduced to the Scottish Parliament in January 2026 and this could indicate how successful or damaging a tourist tax could be on all businesses.
The Scottish Government has also consulted on a levy for cruise passengers docking at local ports.
Why are businesses opposed to the tourist tax?
In their letter to the Chancellor, industry leaders warned that a visitor levy could add £100 or more to a two-week UK family holiday.
They argue this may force families to shorten trips, reduce spending in local establishments or encourage travel overseas instead.
The letter also stressed that fewer visitors could mean fewer jobs. This could have a knock-on effect on a range of sectors that rely on tourism, including retail, entertainment, transportation, real estate and agriculture.
New research from VisitBritain/ VisitEngland found that tourism is worth £147 billion annually to the UK, about five per cent of the national economy and supports about 2.4 million jobs.
The sector is already under pressure from rising costs, increasing employment wages, higher business rates and VAT at 20 per cent, which is higher than many European competitors.
The industry leaders’ closing message was that a visitor levy risks contradicting the Government’s aim of growing the economy and backing British businesses.
What could a tourist tax mean for your business?
If a visitor levy were introduced in your area, this could affect your:
- Pricing strategy and competitiveness
- Occupancy forecasts
- Customer demand
- Administrative workload and reporting requirements
How can we help your business prepare?
Even though a tourist tax is not confirmed, now could be the right time to forecast the effect on your finances.
Our professional team is here to support your business and we can:
- Model the financial impact of potential levies on occupancy and margins
- Review pricing structures
- Ensure accounting systems can track and report levy income separately
If your business benefits from tourism, understanding the potential impact early can help you better prepare if the levy comes into effect.
For further advice or support, contact our team today.
