UKHospitality criticises ‘nonsensical’ holiday tax bill

UKHospitality has hit out at the government after the King’s Speech confirmed the inclusion of a holiday tax bill.

According to the background briefing notes to the King’s Speech, the Overnight Visitor Levy Bill, originally proposed in the 2025 Budget, would “bring England in line with Scotland and Wales, as well as international peers” that operate under a similar policy, citing France, Norway, New York, Amsterdam and Rome as equivalents.

It stated the bill would also “provide a legislative framework to enable mayors and potentially other local leaders to introduce a levy”.

UKHospitality criticised the government U-turn and pointed out that there had been previous government commitments to the House of Commons not to introduce such a tax.

According to independent research from Oxford Economics, the bill would cost holidaymakers a £1.6b tax increase, 33,000 jobs, reduce GDP by £2.2b, lose the Treasury £688m, and reduce tourism spending by £1.8b.

Recent polling has also shown that more than twice as many people oppose the tax (56%) compared to those who support it (24%).

Furthermore, UKHospitality said that voters are nearly 10 times more likely to reject an MP who backs the holiday tax, and has subsequently written to all MPs to warn them of the risk.

Allen Simpson, chief executive of UKHospitality, said: “The government has confirmed it will legislate to make family holidays more expensive during a cost of living crisis.

“It’s a shocking U-turn after it told both the House of Commons and UKHospitality that it would not implement a holiday tax.

“The facts are simple. A holiday tax will increase the cost of a staycation for Brits, it will hit lower-income families hardest, it will lose the Treasury money and it will cost 33,000 jobs.

He added: “This tax, on top of the UK’s 20% rate of VAT, will make us an outlier in Europe. The tax on a holiday in the UK will become double many of our major rivals, who enjoy a much lower rate of VAT.

“It is nonsensical for the government to go ahead with such an unpopular measure. There is still time for the government to think again and stop the holiday tax.”

In December 2025, hoteliers raised concerns over the introduction of a so-called tourist tax on overnight stays in England, with budget accommodation operators warning they could be disproportionately impacted.

Larry Lipman, chairman at European hostel operator Safestay Hostels & Hotels, told The Caterer at the time: “We don’t know how it’s going to be levied, but what we’re all scared of is if they say £2 per bed, it’s going to kill us.”

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