Hospitality businesses are no strangers to operating under cost pressure. Margins are tight, regulation continues to evolve, and operators are expected to absorb change while still delivering exceptional guest experiences.
Against this backdrop, the Government’s consultation on introducing an overnight visitor levy in England is one more development that hospitality leaders need to understand early. While similar levies are already planned in Scotland and Wales, the potential extension into England raises important questions around pricing, competitiveness, administration and how any funds raised will ultimately be used.
This article outlines what we know so far, what is still being consulted on, and why hospitality businesses should be engaging now, before proposals become policy.
What is a visitor levy?
In the recent Budget the Chancellor announced another possible tax bill for the English Hospitality sector, increasing costs for tourists.
Many people who holiday abroad are familiar with the concept of a “tourist tax”. The accommodation owner is usually responsible for collecting the levy and accounting for it to the authorities.
Whilst extra charges added to the listed accommodation price are a common, and unwelcome, aspect of booking short stays on some platforms, new costs are soon to increase the cost of holidaying in the UK.
How Scotland and Wales are approaching visitor levies
Scotland and Wales have already granted local authorities the power to introduce visitor levies, providing a useful insight into how similar measures might operate in England.
Edinburgh will be adding 5% to the accommodation bill from Summer 2026 but the fee is capped at five nights’ costs. To reflect the additional administrative burden, accommodation providers will retain 2% of the amount collected.
Glasgow, West Dunbartonshire and Aberdeen follow suit in 2027, with smaller, 1.5%, rebates for businesses in the first two areas.
In Wales, local authorities will be able to charge a levy from 2027 at a headline rate of £1.30 per person, per night, with a reduced rate of 75p for campsites and hostels. Unlike Edinburgh’s model, there is no cap on the number of nights subject to the levy.
Consultation, flexibility and local variation
In all cases, levies will only be introduced following local consultation, and local authorities will have the power to adjust rates over time. This creates the potential for variation across regions, adding complexity for operators with multi-site portfolios or those operating close to regional borders.
For Hospitality groups, this raises questions around systems, pricing consistency and the cumulative impact of incremental cost increases on demand.
England’s consultation: key questions for Hospitality businesses
With neither the Scottish nor Welsh levies yet in force, HM Treasury is now consulting on whether to introduce similar powers in England. The consultation runs until 18 February and provides an opportunity for businesses to influence how any future levy might operate.
Key areas under consideration include:
- Scope and exclusions, such as whether very small businesses should be exempt, and whether this could unfairly distort competition
- Responsibility for collection and administration, and the associated cost and compliance burden
- Use of funds raised, with suggestions including transport improvements, street cleaning and park maintenance, and cultural or promotional spending
This last point may be particularly contentious. Businesses may reasonably question whether the levy would genuinely be used to support and stimulate tourism, or whether it risks becoming a substitute funding stream for services already financed through business rates and other taxes.
Commercial impact and demand sensitivity
The government’s view is that “modest” levies have a limited impact on visitor numbers. However, for parts of the UK Hospitality sector that rely on accommodation to support wider commercial activities – such as food and beverage, events or leisure – even a small reduction in demand could have a disproportionate effect.
For operators already balancing rising costs, labour pressures and consumer price sensitivity, the cumulative impact of additional charges should not be underestimated.
The Consultation can be viewed and responded to here.
How HaysMac can help Hospitality businesses
HaysMac has a long-standing track record of advising hotels, restaurants, leisure groups and investors across the Hospitality sector. We understand the commercial realities of the industry, as well as the tax rules and practical challenges that sit behind them.
As proposals such as the visitor levy evolve, our hospitality tax specialists can help you assess the potential impact on your business, pricing and operations, and support you in responding to consultations with confidence. We also work proactively with clients to ensure their wider tax position remains robust, efficient and aligned with long-term strategy.
If you would like to discuss how these developments may affect your business, or would value a sounding board as the consultation progresses, please speak to a member of HaysMac’s Hospitality Tax team.
