Rachel Reeves is reportedly planning to unveil a holiday tax in this month’s Budget (Image: Getty)
A holiday tax would cost Britons £518 million and be “another shocking” U-turn by the Government, a leading trade body has warned. Reports suggest British holidaymakers are to face paying a nightly tax on hotel and Airbnb-style stays under plans set to be announced by Chancellor Rachel Reeves in the Budget.
UKHospitality, which represents hundreds of businesses across the UK, has expressed dismay over the reported plot. The trade body is calling on the Government to “stick to its word” and not introduce a holiday tax at the Budget on November 26. It stated that a levy of 5%, the rate set by Edinburgh last year, would amount to an effective consumer tax of 27% on hotels if VAT is taken into account.
Rachel Reeves is due to unveil her Budget later this month (Image: Getty)
UKHospitality said the 5% holiday duty “would cost the already cash-strapped public £518 million in additional tax”.
Reports of the new duty came only weeks after the-then tourism minister, Sir Chris Bryant, told MPs the Government “had no plans to introduce a tourism tax”.
Calling on Labour not introduce the levy, Kate Nicholls, Chair of UKHospitality, said: “If this is true, it would be another shocking U-turn from a Government who committed in the House of Commons only two months ago that it would not introduce a tourism tax, and in fact promised the industry the same thing in writing.
“I know the Government is worried about the cost of living, but this holiday tax is little more than a higher VAT rate for holidaymakers. Brits take over 89 million overnight trips in England, and stay for a total of 255 million nights.
“This is a bill we will all have to pay, and will only serve to ramp up prices and drive inflation.
“It would effectively hike our VAT rate to 27% at a time when Ireland has cut VAT on hospitality to 9% and Germany already has a VAT level of 7%.”
She added: “We need to get consumers spending. But this, on top of the huge damage from last year’s Budget, would only mean people cut back more – and more jobs are lost.
“Hospitality cannot foot the bill for the rest of the economy yet again.”
According to The Times, Ms Reeves is set to give regional mayors new powers to impose a tourist levy.
It is said she hopes it will raise hundreds of millions of pounds to be invested locally into public services and transport.
Devolved governments in Scotland and Wales are introducing the tax too, with government insiders claiming England is an outlier for not following suit.
