England’s mayors will soon have the power to impose an uncapped tourist tax on overnight stays, including hotels and bed-and-breakfasts, under new government plans. The levy will be a percentage of a visitor’s total spend rather than a fixed fee, applying to both British and international guests.
The funding raised would be dedicated to tourism-related projects, though local leaders have signaled caution in setting rates.
Mayors in Yorkshire have stated they will not exceed a 5% levy, while others plan to cap charges or opt out entirely.
Exemptions can be made for specific types of accommodation, such as campsites, but entire localities cannot be excluded to avoid confusion. The government has not yet set a timeline for introducing the bill to Parliament, referring only to bringing it “in due course.”
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The move has drawn criticism from small business groups, who warn it will worsen financial pressures on an already struggling sector. Tina McKenzie, national chair of the Federation of Small Businesses, called it a “kick in the teeth” for hospitality firms. She noted that 91% of small operators have seen rising costs over the past year, with a third considering downsizing, closing, or selling within the next 12 months.
McKenzie argued the new tax is one-sided, allowing mayors to raise rates but not reduce them. She urged exemptions for small businesses like B&Bs and guesthouses, warning that added administrative burdens and price sensitivity could push struggling operators over the edge. It would also disproportionately affect self-employed travelers staying overnight for work, further tightening already thin margins.
Julie Fisher, UK CEO of Simply Business, highlighted that 97.7% of the UK’s 170,000 hospitality businesses are small operators. She cautioned that it could double the strain on owners by increasing administrative workloads and potentially reducing visitor numbers. Fisher urged the government to consider how any new funds could directly benefit the businesses that sustain the tourism economy.