Reeves could allow holiday tax on English hotel and Airbnb stays

"British holidaymakers could have to pay a nightly tax on hotel stays and Airbnb-style visits in plans expected to be announced by Rachel Reeves in the budget next week. The chancellor is reportedly preparing to give mayors powers to raise taxes by charging tourists on the cost of an overnight stay in their cities. The tax could raise hundreds of millions of pounds for mayors to invest in transport and public services, but it would represent a further blow for the hospitality industry, which was squeezed by tax rises and extra employment costs announced in the last budget."

"The trade body UKHospitality, which represents thousands of restaurants, hotels and pubs, said a tourism tax of 5% the rate to be set by Edinburgh from next July would mean an effective consumer tax of 27%. That figure includes standard 20% VAT on the hotel stay, as well as VAT on the holiday tax itself, making it one of the highest tourist tax rates in Europe, the trade body said. It estimated that a 5% holiday tax would cost Britons 518m in additional costs."

"Kate Nicholls, the chair of UKHospitality, said: I know the government is worried about the cost of living, but this holiday tax is little more than a higher VAT rate for holidaymakers. Brits take more than 89m overnight trips in England, and stay for a total of 255m nights. This is a bill we will all have to pay, and will only serve to ramp up prices and drive inflation."

Mayors are expected to be empowered to levy a nightly tourism tax on hotel and short-term rental stays, charging visitors for overnight accommodation. The levy could raise hundreds of millions of pounds for mayors to invest in transport and public services but would increase costs for holidaymakers and further pressure the hospitality sector. UKHospitality calculated a 5% levy would create an effective 27% consumer tax when combined with 20% VAT plus VAT on the levy, estimating an additional £518m cost for British travellers. Scotland and Wales are introducing similar levies and changes are to be added to the English devolution and community empowerment bill.

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