England plans uncapped overnight tourist levy, hospitality sector warns of job losses

The UK government is set to give mayors and local leaders in England the power to impose a so-called overnight visitor levy on hotels, holiday lets and bed and breakfasts, with no cap on how high it could be set, according to a report in the Daily Telegraph.

The push began last year when Andy Burnham, then mayor of Greater Manchester, and Steve Rotheram, mayor of the Liverpool city region, urged the government to allow mayors to introduce what they called a visitor levy. In May, Prime Minister Keir Starmer included plans for an overnight visitor levy bill in the king's speech. Scotland and Wales already operate their own versions of such a levy.

No upper limit

In May, the government had not specified whether the levy would be capped. It has now emerged that England will follow Scotland's model, where there is technically no upper limit, rather than Wales's capped approach. Shadow chancellor Andrew Griffith said an unlimited tourist tax would significantly limit job opportunities for young people who might otherwise work in tourism and hospitality.

Industry warns of job losses

Allen Simpson, chief executive of UK Hospitality, told the BBC's Today programme that giving mayors open-ended power to set the levy at any level could cost around 33,000 jobs if the rate reached 5%, the level currently charged in Edinburgh. He noted that VAT on hospitality is already 10%, and the new levy could add an average of £100 to £120 to the cost of a family holiday.

Simpson acknowledged mayors would not be obliged to introduce the levy, but argued that cash-strapped local authorities, hit hard by years of austerity, would be likely to use any devolved tax-raising power to the fullest extent.

The plans are due to be discussed today at a meeting between Communities Secretary Angela Rayner and regional mayors.