Cost of staycations could rise due to potential ‘holiday tax’

Leading figures in the hospitality and leisure industries have warned that the cost of a two-week holiday in the UK for British holidaymakers could rise by £100 or more if the government goes ahead with plans to allow a new ‘holiday tax’.

Nearly 200 bosses from major UK hospitality companies including Butlin’s, Hilton and Travelodge have collectively written to the Chancellor, stating that “holidays are for relaxing, not for paying taxes”.

They warned that such a tax would severely impact families, jeopardize employment and divert vital funds away from local communities.

The letter, coordinated by trade body UKHospitality, urges ministers to abandon proposals for a visitor tax in England.

Rachel Reeves confirmed in last year’s autumn budget that English regional mayors would be given the power to impose these visitor taxes on overnight stays in hotels, Airbnbs and other holiday homes.

The plans, which mirror similar devolved moves in Scotland and Wales, are designed to give local mayors more funding to invest in local infrastructure and transport.

Mayors in London and Liverpool are already among those welcoming the plans and have said they will impose taxes.

In the letter, industry bosses said: “This ‘Holiday Tax’ will hit families hardest, put jobs at risk, drain local businesses and communities of money and undermine the Government’s growth agenda.

“For millions of hard-working families, a UK holiday is a chance to relax and spend quality time together.

“For many people, this tax will make their holidays unaffordable, meaning families will shorten trips, give up holidays altogether, reduce spending on pubs, restaurants, events, leisure and local attractions, or travel abroad to spend their money elsewhere and create jobs.”

Hotels and other accommodation operators have also warned about the impact of upcoming increases on business rate payments.

Pubs received additional support from the Chancellor earlier this month to reduce their bills by 15 per cent compared to April, but other firms in the UK’s hospitality sector said they still faced significant pressure and called for more support.

The new letter said: “The UK’s hospitality sector is already under pressure from rising business rates, energy costs, tax bills and employment costs.

“It already contributes billions of pounds in tax through business rates, employment taxes and VAT, which at 20 per cent is twice the rate of its rivals in France, Italy, Spain or Portugal.

“Don’t turn a Great British holiday into a luxury. Abolish the holiday tax and take back the families, workers and businesses that make Britain worth visiting.”

A Government spokesman said: “Tourists travel from near and far to visit England’s amazing cities and parts.

“We are empowering our mayors to take advantage of this and allocate more money to local priorities so they can continue to stimulate growth and investment in the economy by supporting thriving communities.

“We expect the new fees to be modest and in line with other countries, and mayors need to consider the right level for their area.”