Tourist Tax Proposal in the UK: Massive Impact on Holidaymakers and Staycations

Published on November 26, 2025

Overnight guests in the UK are about to remain in a more expensive destination, as mayors across the UK are about to receive powers to impose a Visitor Levy. This is to give local authorities in the UK a new source of revenue to fund public infrastructure, enhance mobility, and stimulate the tourism economy.

Most economists in the industry are not in support of the additional taxation of tourists and consider it a tourism tax. The money people are going to be required to pay is going to be worse than what is already being offered to people to take a holiday in the UK as it is a public holiday. Shortly a public tax is going to be introduced, and the public consultations for the tax are about to begin that will end in 12 weeks, so the public tax is likely to be in force by February 2026.

What the Visitor Levy Could Mean for Holidaymakers

The visitor levy, which would be introduced on overnight stays, could have a direct impact on travelers across the UK. The new charge is expected to be applied in major tourist cities, towns, and villages, potentially increasing the cost of a family getaway or a weekend break. While the exact amount of the tax has not yet been specified, it is likely to be a small daily fee added to hotel and accommodation bills.

For many British holidaymakers, this additional cost may feel like an unwelcome burden, especially as the UK tourism industry has been recovering from the financial impact of the COVID-19 pandemic. This tax could deter people from choosing domestic vacations, particularly in areas that are heavily dependent on tourism.

Government’s Rationale: Funding Local Growth and Infrastructure

The UK government, through the Ministry of Housing, Communities and Local Government, argues that the introduction of the visitor levy will provide much-needed funding for local projects. Minister Steve Reed emphasized that this new tax would allow mayors to invest in their cities’ infrastructure, transport systems, and the visitor economy without needing approval from central government.

“Tourists travel from near and far to visit England’s brilliant cities and regions. We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come,” Reed said.

England sees more than 130 million overnight visits each year, making tourism an integral part of the local economy. The visitor levy would allow local authorities to directly benefit from the influx of tourists, which would, in turn, help improve facilities, enhance visitor experiences, and contribute to community development.

Tourism Industry Concerns: A Blow for Staycations

Despite the government’s reasoning, the proposed levy has sparked concern within the tourism and hospitality sectors. Industry leaders argue that the tax could have unintended consequences, particularly for families already dealing with rising living costs.

Ben Spier, head of policy and regulation at Sykes Holiday Cottages, called the introduction of the tourism tax a “blow” for the UK’s hospitality industry. He pointed out that many small businesses, such as holiday let owners and local shops, already face a range of taxes and regulatory changes. Adding another layer of financial burden, especially on tourists, could hurt these businesses and make the UK a less attractive holiday destination.

Spier also raised concerns about the potential impact on staycations. With many families already feeling the pinch from rising household costs, the introduction of the levy could lead to fewer people choosing to holiday within the UK. “This levy won’t just be felt by families already managing rising household costs, it threatens to deter people from choosing holidays in the UK,” Spier said.

International Precedents: A Familiar Practice Abroad

Tourist taxes are not new concepts in the global tourism industry. Cities like New York, Paris, and Milan already impose similar levies on visitors, which are used to fund local infrastructure and tourism projects. These cities have long relied on the revenue generated by tourist taxes to maintain public services and improve the overall experience for visitors.

The UK government’s new proposal follows in these cities’ footsteps, and mayors will now have the ability to introduce such a levy without the need for central government approval. The introduction of a visitor tax could be seen as part of a broader move toward allowing local leaders more control over their cities’ finances and tourism policies.

However, the impact of such taxes on visitor numbers is still under debate. Research cited by the government suggests that reasonable fees have minimal impact on the number of visitors. Whether this holds true for the UK remains to be seen, particularly as the nation works to recover from the pandemic’s impact on tourism.

Exemptions and Flexibility: Who Will Be Affected?

The new levy would apply to a wide range of accommodation types, from hotels to holiday lets and guesthouses. However, there will be certain exemptions to the charge. Emergency accommodation, homeless shelters, and registered Gypsy and Traveller sites used as primary residences will not be subject to the tax. Additionally, mayors and local leaders will have the power to exempt other accommodation types if they choose.

This flexibility could allow local governments to tailor the levy to the needs of their communities, ensuring that certain types of tourism are not disproportionately impacted. For example, small family-owned B&Bs may be exempt, while larger chain hotels could be required to collect the tax from guests.

Regional Leaders React: Support and Opposition

Mayors from across the UK have responded to the announcement in a variety of ways. London Mayor Sadiq Khan has been one of the key advocates for the new levy, highlighting how the additional funding could support London’s economy and help reinforce its status as a global tourism and business hub. Khan expressed his confidence that the extra revenue would help fund key services and enhance the overall tourism experience in the capital.

Similarly, Helen Godwin, Mayor of the West of England, welcomed the move, calling it a “real vote of confidence” in the region’s ability to take control of its future. Local leaders in other regions are also expected to embrace the new powers, as it gives them a degree of financial autonomy to manage and grow their local tourism economies.

Consultation and Next Steps: Gathering Feedback

The UK government is now entering a 12-week consultation period, during which businesses, local communities, and other interested parties can provide feedback on the proposed visitor levy. The consultation, which is available on the GOV.UK website, will allow stakeholders to voice their opinions on how the levy should be implemented and whether it will achieve the desired outcomes.

The consultation will close on February 18, 2026, and the government has indicated that it will carefully consider all feedback before moving forward with the policy. In the meantime, businesses and tourism leaders will continue to assess the potential impacts of the levy on their operations and visitors.

A Complex Issue for the UK Tourism Industry

The UK visitor levy as proposed by the British government the visitor levy has sparked considerable debate between various industry stakeholders, including policymakers, industry leaders, and those in the tourism sector. There is the concern about the negative impact on small companies and domestic tourism. This visitor levy has sparked significant debate among various stakeholders. The proposed visitor levy is a leading concern in the UK. The government has stated that the tax will assist in funding the tax. There is significant concern about the visitor levy and its impact on small businesses, domestic tourism, and the economy as a whole.