HOLIDAY destinations could turn into “ghost towns” during the off season amid the impact from controversial tourist tax, Reform UK say.
Labour mayors are planning a levy of up to 5 per cent on overnight stays which will have a devastating impact on companies who rely on winter visitors to keep them going.
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Andy Burnham has given the green light for local leaders to decide whether to bring in the tax despite a major backlash from the hospitality sector.
It means holidaymakers could be forced to cough up extra cash for every night of their trip – potentially piling £100 or more onto the cost of a family break.
Robert Jenrick, Reform’s Treasury spokesman, said: “The holiday tax will take a wrecking ball to seaside towns.
“It’ll turn resorts into ghost towns in off-peak months as the cost of a caravan holiday will nearly double.
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“Mayors might scrape in some extra money, but it’ll be offset by the staff who will sadly be laid off as demand plummets.
“Anyone with an ounce of business experience could see from out of space that this is a bad idea.
“But this Government of amateurs who haven’t got the faintest clue about businesses or working people.
“Reform mayors won’t touch this with a barge pole.”
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What is the UK tourist tax and when could it come into effect?
By Alex Nelson
BRITS planning a domestic getaway could soon face an extra charge on their hotel bills under government plans to hand regional mayors power over a “tourist tax”.
Formally known as the Overnight Visitor Levy, the charge will allow local leaders across England to add a fee to hotel rooms, bed-and-breakfasts, and holiday lets like Airbnb.
The charge is a new levy added directly to overnight accommodation bills in participating regions.
The tax will apply to everyone staying overnight, whether you’re an overseas tourist visiting London or a British family taking a weekend staycation in Yorkshire.
How much will it cost?
The law itself will not set a hard national cap, giving regional mayors powers to set rates.
Unlike flat-rate schemes used in some cities, ministers have designed the tax as a percentage of the total room rate.
Labour’s regional mayors have committed to keeping any tax rate under 5% to avoid driving away visitors.
With the national average hotel room sitting around £198 a night, a 5% levy would add nearly £10 per night to a stay.
Over a week-long family staycation, that could add up to £70 extra on accommodation costs.
Because the tax is calculated as a percentage, cheaper accommodation will incur lower fees than luxury five-star hotels.
Day-trippers who do not stay overnight will not have to pay.
Where will it apply?
The powers will be available to elected mayors across English regions.
Destinations set to receive these tax-raising powers include:
- Greater Manchester
- Liverpool City Region
- London
- North East England
- West Yorkshire
- York and North Yorkshire
Existing voluntary schemes, such as Manchester’s flat £1-a-night city charge, are expected to be replaced by the new percentage levy.
Similar capped levies are already live in Edinburgh and due in Wales by April 2027.
Why is it controversial?
Supporters say the move brings England in line with popular international destinations like Paris, Venice, and Rome.
Housing Secretary Angela Rayner and London Mayor Sadiq Khan have said the raised funds will stay local, funding public transport, high streets and cultural attractions without having to rely on Treasury coffers.
But hospitality leaders and small business owners have criticised the plan.
Trade body UKHospitality warns the levy could cost the sector up to £1.6billion and put jobs at risk by making UK holidays less competitive during an ongoing cost-of-living squeeze.
Major domestic operators and local traders fear the policy will hit hard-working families worst.
Resorts like Butlin’s have warned that an unlimited tax risks making UK family breaks unaffordable, damaging demand, and hurting youth employment.
Independent business owners are equally worried.
Caron Cooper, who has run the Fosse Farmhouse B&B in the Cotswolds for 42 years, said the tax comes as small operators struggle with rising costs.
“Just as we felt like we are coming through it and tourism’s back, this is like a hammer blow really,” she said.
Urging ministers to swap a percentage penalty for a flat £1 charge, she added: “If it was a pound on each booking then I could understand that, they would just be able to afford [it].
“Just to add a percentage, I think, no, it’s unfair and it will hit the poorest the most.”
Could Brits be exempt?
Under current government plans, the Overnight Visitor Levy is designed to apply to everyone staying in paid accommodation.
It will apply regardless of whether you’re an overseas tourist, a Brit on a family staycation, visiting relatives, attending a university open day, or someone travelling for business.
Everyone paying for an overnight stay in a participating area will see the charge added to their final bill.
Ministers and local authorities have ruled out creating “Brit discounts” or local exemptions for several reasons.
For instance, forcing hotel staff and B&B owners to verify passports, driving licences, or council tax bills to prove local residency would create administrative chaos for small hospitality businesses.
The charge only targets commercial, paid accommodation – crashing on a spare bed or sofa will remain tax-free.
Allen Simpson, Chief Executive of UKHospitality, said: “Hospitality and tourism underpins so many of our communities and a holiday tax hits hard-working families, jobs and businesses.
“The Government should scrap the tax.”
Polling shows a levy would deter or stop 73 per cent from taking a break in England and would push 39 per cent to go abroad instead.
Some 85 per cent of people would be put off from a staycation if it went up by £100 with one in five put off by any increase.
An industry source said: “It won’t just be the chill east winds hitting coastal community off peak when this tax comes in.
“Off peak travellers are incredibly price sensitive, pretending that 5%+VAT isn’t a big increase shows how out of touch Mayor and the Cabinet are.
“When people stop visiting local businesses will close taking thousands of jobs with them.”
The industry is already reeling from high eenrgy costs, national insurance rises and minimum wage hikes.
Labour mayors will set a levy of up to 5 per cent in their ten regions. Reform and the Tories have said they won’t bring in the tax.