BUDGET 2025: Government confirms tourism tax

Mayors will be able to introduce tourist taxes in England under new government measures to be announced as part of today’s Budget announcement.

Communities secretary Steve Reed confirmed that mayors will be able to impose a “modest” charge on visitors staying in the following accommodation types:
hotels

• bed and breakfasts
• guest houses
• holiday lets.

The levy will bring England in line with Scotland and Wales, which already have tourist taxes in place.

Other international cities, including New York, Paris and Milan also charge a tourist tax.

Estimates from the Greater London Authority suggest that a £1 a day levy could raise £91m while a 5% levy could raise a £240m.

Our view

“A tourist tax in England could provide much-needed funding for local authorities, many of which are already facing severe financial pressure.

Several councils have recently issued Section 114 notices, signalling that they are forecast to run out of money in the coming year.

However, balance will be key to ensure it’s applied successfully.

Any type of tourist tax must be clear to ensure that local services are adequately funded and supported. And fairly applied to avoid driving visitors away.
Setting the tax too high could deter people from the UK and abroad from exploring the wealth of beautiful locations England has to offer.

The knock-on effect would is that it drives more funding out of already strained local authorities, putting further pressure on councils and services.”

The tourist tax, along with a raft of others will be announced as part of Chancellor Rachel Reeve’s Budget announcement at 12:30pm today.

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