UK tourist tax: how much is it and which destinations are affected? - The Times

Visitors to English cities and regions will soon have to pay a tourist tax under plans announced by the government to allow mayors to add an extra 5 per cent charge to overnight stays.

The charge will be uncapped, so leaders in English towns and cities can choose how much they want to levy — although it’s thought the amount won’t exceed 5 per cent. The money raised will go towards local projects, and mayors will be able to choose how to invest it. These plans were first announced last year.

There are more than 130 million overnight stays in England each year, all of which would be liable for the charge when it is introduced.

Tourist taxes are not new. Edinburgh started charging overnight visitors in July, while plenty of cities across Europe have them in operation. Britons will be familiar with city taxes in Spain, Italy — including a well-publicised one in Venice — and in some US states. 

The introduction comes at a time when holiday prices, both in the UK and abroad, are already high. This year’s Post Office Family Holiday Report showed that the cost of eating out and attractions in some European resorts rose by over 20 per cent compared to the year before; while the latest data on accommodation costs from Visit Britain notes that in July there was a 5 per cent year-on-year jump in the average price of a hotel room, now £198.

Broadly, it’s an extra, modest charge, usually added to a hotel bill, which then goes towards local coffers to fund things like public transport. Many cities and countries around the world charge them, and often tourists won’t notice a small extra fee at the end of their bill. Tourism taxes are not easily levied on day trippers to a city, purely because it’s more difficult to make them pay, although Venice has implemented a QR code payment scheme for its own €5 (£3.50) charge.

English mayors will be given powers to charge a percentage of the total bill for overnight stays. It will apply to tourists staying overnight in hotels, in holiday lets from platforms such as Airbnb, and in B&Bs and guesthouses. It’s likely it will be included in final bills as a separate charge. All visitors, regardless of nationality and reason for visit, will have to pay it. It will be uncapped, meaning mayors can choose how much to charge, but it’s thought it’s unlikely it will be enough to drive away tourists.

It is uncapped, but expected to be no more than 5 per cent on the price of overnight stays. Edinburgh and Wales (from April 2027) have introduced similar taxes, although importantly they are capped. The levy for the Scottish capital came into effect this July, at 5 per cent of the net cost of the accommodation, capped at five nights. A capped levy of up to £1.30 per person per night is due to come into force in Wales in April.

Everywhere in England, although the price will depend on where you visit. Mayors to be given these powers include those in London, Liverpool, Greater Manchester, the West of England, West Yorkshire, North East England and York and North Yorkshire. Manchester already has a “city visitor charge” of £1 per room per night, which applies to some hotels and apartments, but the new uncapped levy will replace it.

Mayor of London Sadiq Khan welcomed the ability to charge an overnight visitor levy to “raise and invest funding locally”. He said: “A well-designed, modest levy has the potential to provide an important additional source of funding to support growth, strengthen London’s offer to visitors and help us remain globally competitive. It would allow us to reinvest in the places, infrastructure, culture and experiences that make London one of the world’s greatest cities to visit, while helping manage the pressures that come with welcoming tens of millions of visitors every year.”

Allen Simpson, chief executive of UKHospitality, a trade body that represents the industry, told BBC Radio 4’s Today programme this week that holidays in the UK were “already more expensive” than they appeared because of higher VAT. “What we’re talking about here is an open-ended power for mayors to set tourism taxes at any level they want,” Simpson said. “And remember that if you go to Paris, if you go to Rome, if you go to Berlin, you’re paying a small tourism tax, but it’s capped.”

Kate Nicholls, chair of UKHospitality, said last year that the tax “will only make life more expensive for working people” and estimated that it could cost visitors to the UK an extra £518 million.

Not for another year or so at least. In his first speech to parliament as prime minister on September 1, Burnham said he would grant “powers long requested by mayors”. These included “the ability to set an overnight visitor levy to commence towards the end of the financial year 27-28”. It’s unlikely it will be in operation before 2028.