Tourist Tax: All you need to know

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What is tourist tax?

Tourist Tax or Visitor Levies are added charges for visitors who stay overnight in a particular city or area. These are usually small fees, decided by the local authority, charged per night. Popular European destinations such as Barcelona and Paris have had these charges in place for years and Manchester implemented its own £1 per room, per night visitor charge in 2023.

Why is it being implemented?

In the Chancellor’s Autumn Budget last month, it was announced that English Mayors will now have the power to implement a tourist tax on overnight stays in their area, if they wish. The government says the extra income generated will give cities the means to invest in infrastructure, tourism and transport, to drive growth and boost revenue.

The UK currently lags behind the rest of Europe when it comes to taxing visitors, with cities such as Venice even introducing a charge for day trippers in 2024. With the cost-of-living crisis still ongoing, the government is keen to leverage any possible means to raise extra vital funds, and with over 130 million visitors to England each year, taxing tourists is set to raise a large amount of much-needed cash for the country.

Why is there some opposition to the tax?

Trade bodies and organisations representing the hospitality industry such as UK Hospitality have spoken out against these plans since the budget announcements, saying the proposed taxes will push up the cost for guests, deterring them from visiting UK cities.

UK Hospitality argues the tax will threaten the industry’ recovery and competitiveness whilst it is still rebuilding from the pandemic and battling rising costs.

Tourist tax would apply to every stay in English hotels, B&Bs and holiday rentals, per night, even for those visiting from the UK. Critics say that British families will now face a ‘holiday tax’ on well-deserved staycations and breaks in England, whilst hotels, holiday parks and other attractions could face pressure from losing visitors.

Despite these arguments, research shows that tourist tax of £1-2 per night makes little to no difference on visitor numbers.

What are the positives?

Tourist tax is a tried and proven method of raising funds to boost the visitor economy in cities around the world.

By implementing £1 per night tax across England, £250 million could be generated to improve infrastructure and boost local tourism. Mayors from across the country have spoken in support of the proposals, like Sadiq Khan who hailed the announcement as “great news” for London. The capital could generate a huge £91 million through a visitor levy.

Edinburgh, which has a 5% tax implementation planned for 2026, is planning to allocate the funds raised to build 500 affordable homes in the city. Manchester’s tourist tax raised £2.8 million in its first year, which was invested into hospitality marketing and street cleaning.

The future for hospitality

Hoteliers, B&B owners and other hospitality businesses are understandably wary of new levies pushing prices up for visitors and the impact this will have on their booking numbers and ultimately, profits. With charges applying to every guest, not just overseas visitors, many Mayors will undoubtedly choose not to impose the tax, such as Tees Valley Mayor, Ben Houchen, who has already said there will be no plans for a levy in his area.

With many areas in England looking to impose tourist tax, this will be something for hospitality businesses to consider for the coming months, while the government holds its consultation period until the February 18^th, 2026.

Although the full impact is unknown here, other cities across Europe have shown that a small daily fee does not deter visitors, and we hope that England will follow suit.

To find out more about Tourist Taxes, visit: https://commonslibrary.parliament.uk/tourist-taxes-in-the-uk/