Tourist Tax is set to be introduced in cities across the country, under plans announced by the Government this year. The fee will apply to overnight stays, meaning hotels and other accommodation businesses will be hit the hardest by this change as customers face rising costs for their stays.
How will it be introduced?
This will not be a nationwide blanket policy; instead, Rachel Reeves has decided to leave the decision with mayors throughout the UK. London Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham have been vocal about their support for the measure, however, the hospitality industry in the UK remain opposed. UKHospitality have projected that a 5% tourist tax would cost £518 million in additional tax for members of the UK public who take domestic holidays, with 89 million overnight trips having been taken by Brits in England in 2024.
How much will the tax be?
There has been no set cost allocated for the tax yet. This will also depend on the region/city. Edinburgh’s is set to be 5% of the cost of accomodation, whereas in Wales tourists face an add-on fee of £1.30/night. London currently has no fixed fee in mind, however, estimates suggest that a tourist tax in London could raise up to £240m a year.
When will it be introduced?
Realistically, these measures will not kick in for a while. There is a consultation with businesses and communities that lasts until February. The English Devolution and Community Empowerment Bill, which will give mayors the power to impose these taxes, will then be put through parliament. We likely will not see the full effect of these taxes until 2027.
Where does the money go?
The goal with this tax is for the money to be reinvested back into the community and local projects. One such example given by Gov.uk is to have tourist tax imposed in Liverpool repurposed to help prepare the city for the upcoming UEFA Euro 2028, which will be a big driver of the Liverpool economy.
