Expanded UK Holiday Tax Will Hike Costs for Families

In Brief: The UK government’s expansion of holiday accommodation taxes is expected to increase costs for families, directly affecting hotel and short-term rental operators by raising the overall price of domestic holidays.

UK Business Groups Unite Against Holiday Tax – Image Credit Unsplash

Government plans for nationwide holiday tax will cost 33,000 jobs and hike the cost of a family holiday.

UKHospitality has said Government plans to expand holiday tax powers to all strategic authorities will cost jobs and increase the price of a family holiday.

The Government set out in its ‘Rewiring the State’ policy paper its intention to ensure ‘every area in England’ has a strategic authority in place by 2028, while simultaneously giving all strategic authorities the power to introduce a holiday tax.

‘Holiday bonus’ proposal

Rather than a nationwide holiday tax, UKHospitality has written to the Prime Minister with its proposal for a ‘holiday bonus’.

As with its plans for income tax and business rates, the Government should instead devolve central government revenues to local authorities on the basis of how many visitors it receives.

Such a scheme would incentivise tourism, support hospitality and drive economic growth, rather than a holiday tax costing 33,000 jobs, reducing national GDP by £2.2 billion and increasing the cost of a family of four going on holiday by £100.

Allen Simpson, Chief Executive of UKHospitality, said: “As we warned would be the case, proposed holiday tax powers for Mayors are being swiftly expanded to every strategic authority in England.

“It’s clear the Government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost-of-living crisis.

“I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs.

“The solution is simple. Treat hospitality the same as every other sector. Instead of devolving taxation powers, devolve central government revenues to local authorities through a holiday bonus instead.

“Rewarding local authorities with fixed revenue per visitor night, for example, incentivises tourism and drives economic growth, rather than costing jobs, deterring visitors and making family holidays more expensive.

“The cost of lost VAT and increased benefits through reduced economic activity and employment will in many areas outweigh the revenues raised by a tax. A holiday bonus is the right kind of devolution – more revenue and control for local communities, without the lost jobs caused by a holiday tax.”