The government says mayors will be able to impose an uncapped tourist tax on accommodation such as hotels and B&Bs
Local mayors in England are set to get powers to impose an uncapped tourist tax on overnight accommodation, including hotels and B&Bs.
It would be a percentage of the visitor’s total spend as opposed to a flat fee. It applies to British visitors and international visitors.
Leaders say the money raised could be ring-fenced for tourism-related spending. Mayors in Yorkshire are making it clear that they won’t be imposing a levy over 5%. Other city leaders said that they would limit the levy while some won’t impose it at all.
Mayors will be allowed to make exemptions for certain accommodation, such as campsites. However, they won’t be able to exempt entire localities to avoid confusion for visitors and businesses.
The government said it will bring a bill to parliament ‘in due course’ to introduce the levy.
Extra strain on the hospitality industry
Tina McKenzie, national chair at the Federation of Small Businesses (FSB), described the move as a ‘kick in the teeth’ for the hospitality industry.
“Running costs have already increased for 91% of small hospitality firms over the last year. A third of hospitality businesses have already told us that they are likely to downsize, close or sell up in the next year.
“This is one-sided devolution, where mayors can only put up taxes and never cut them.
“It’s crucial that the smallest accommodation businesses like B&Bs and guesthouses are exempt from the levy. Local authorities must use their powers to protect the smallest of businesses if they choose to raise a levy. The added burden of extra administration, paired with price sensitivities, will be too much for them to bear. This change would also have a disproportionate impact on small businesses and self-employed people staying overnight for work purposes. While bigger companies might be able to absorb these costs, for small firms it will just add to already tight margins.”
Julie Fisher, UK CEO at Simply Business, said: “There are approximately 170,000 hospitality businesses in the UK, of which 97.7% are small businesses. A new levy on tourism could hit small hospitality business owners two-fold – increasing an already high administrative workload and potentially reducing visitor numbers.
“We urge the government to think carefully about the impact this new levy could have on this crucial community of small businesses. If it is introduced the government should consider how additional funds can benefit the hospitality and accommodation businesses who make up much of the visitor economy.”
