“We’ll be tax collectors now”: Tourist charge sparks revolt from B&Bs and hotels

Britain’s small hotels, B&Bs and guesthouses are warning of a tourism bloodbath after ministers unveiled plans for a new overnight visitor levy in the King’s Speech. The Government insists the charge will help fund cleaner streets, better transport and local tourism projects, but hospitality firms say it risks pushing already struggling businesses over the edge. With family budgets already stretched and staycations slowing, owners fear even a small nightly surcharge could drive visitors to cheaper areas, cut bookings and hammer fragile coastal and rural economies. Critics say ministers are trying to sell the levy as “growth” while forcing thousands of small firms to become unpaid tax collectors at the worst possible time.

Photo by Dmitrij Paskevic on Unsplash

The new Overnight Levy which made it into the King’s Speech is set to hit people’s holidays and small businesses are fearful of the fallout.

Ministers say the Overnight Levy will “boost local areas”, but hospitality and tourism businesses have been warning since this was first suggested, that it could hammer small firms already on their knees.

The Bill hands mayors, and possibly other local leaders, the power to add a new nightly charge on hotel stays, B&Bs, guesthouses and short‑term lets. It’s being billed as “fiscal devolution”. But for thousands of small hospitality businesses, it could spell fiscal devastation.

The levy is meant to:

• Raise money locally

• Improve public services

• Boost tourism infrastructure

• Help communities cope with visitor pressure

• Bring England in line with Scotland, Wales and the rest of the G7

Ministers say the cash could fund everything from street cleaning to transport upgrades, cultural events and visitor facilities. Mayors are thrilled and have been quick to welcome the move saying it will unlock opportunities and help businesses thrive. It seems businesses disagree but then they are unlikely to have been listened to.

SMALL & MICRO BUSINESSES REALLY THINK

Hospitality and tourism firms, especially independents, warn the levy could:

Push up prices for guests

Small B&Bs and family‑run hotels fear visitors will simply book in areas where the levy isn’t being applied. Because they are already on their knees due to increasing wages, business rates and National Insurance Contributions on top of spiralling energy and food costs every little additional costs brings small and micro business closer to financial disaster. Big businesses have deeper pockets and can probably cope but for small firms passing additional costs on to customers is a no-no because customers are struggling too and cutting back. Trying to absorb additional costs and stay afloat doesn’t add up either.

Add new admin and compliance costs

Micro‑businesses already drowning in paperwork say this is “one more thing we don’t have time for”.

Hit domestic tourism at the worst possible time

With households cutting back and staycations slowing, the timing is brutal.

Create postcode chaos

If some areas charge and others don’t, small businesses in levy zones could lose out.

Hurt rural and coastal economies

Many rely on fragile seasonal trade. A few pounds extra per night can make or break demand.

One small hotel owner told industry groups: “We’re still recovering from Covid, energy bills, inflation and staff shortages. Now they want us to become tax collectors too.”

“Everyone else does it” is not a valid argument

The Government points out that:

• France has had a tourist tax since 1910

• New York, Amsterdam and Rome all charge visitors

• Norway is introducing one in 2026

• Scotland and Wales already have powers to do it

But small UK businesses say the comparisons don’t stand up.

Those countries have:

• lower business rates

• stronger tourism budgets

• better local infrastructure

• more support for small firms

The Government says the levy will fund:

• public transport upgrades

• cultural and sporting events

• street cleaning

• tourism infrastructure

• local economic development

All of those things sound good on paper but they must benefit the businesses that generate the money.

Small firms want guarantees that:

• funds stay local

• spending is transparent

• hospitality businesses have a say

• money supports the visitor economy, not general council budgets

None of that is nailed down.

The big fear is fewer visitors and job cuts

Small hospitality and tourism businesses warn the levy could:

• reduce overnight stays in levied areas

• shorten trips

• cut mid‑week bookings

• hit family budgets

• push visitors to cheaper areas

• reduce local spending in shops, cafés and attractions

For micro‑businesses with tight margins, even a 5–10% drop in occupancy can be catastrophic and would mean making ‘efficiencies; such as cutting jobs.

The Government says the Overnight Visitor Levy will:

• raise money

• improve services

• boost tourism

• empower local leaders

But small and micro hospitality businesses fear it could:

• raise prices

• reduce demand

• increase admin

• create unfair competition

• hit already fragile local economies

The tourist tax may help councils, but unless it’s designed with small businesses in mind, it could hurt the very firms that keep our visitor economy alive.

Overnight Visitor Levy Bill

● The Overnight Visitor Levy Bill will deliver on the manifesto commitment to transfer power out of Westminster by devolving new revenue raising powers.

● This is the first step in a new era of fiscal devolution in England, giving mayors and potentially other local leaders of Foundation Strategic Authorities the power to introduce a levy to raise and invest money into projects that improve their areas, raise living standards and drive growth.

What does the Bill do?

● In the 2025 Budget, the Government committed to a new overnight visitor levy and launched a consultation on its design. This Bill delivers on that commitment. The Government will shortly publish a response to the consultation, setting out stakeholder views and providing further detail on the design and implementation of the levy, including a position on extending this power to Foundation Strategic Authorities.

● The levy will enable places to reinvest revenue in local priorities, support economic growth, strengthen public services, and improve the visitor experience – helping destinations remain attractive to visitors while ensuring tourism contributes to thriving local communities. The Overnight Visitor Levy will enable mayors and potentially other local leaders to raise revenue and reinvest it back into their local economies.

● This Bill will bring England in line with Scotland and Wales, as well as international peers. Scotland and Wales have already introduced powers for local authorities to raise a visitor levy. Visitor levies are common in Europe and the rest of the world, and all other G7 countries already maintain some form of tourism or accommodation levy.

● This Bill will provide a legislative framework to enable mayors and potentially other local leaders to introduce a levy. It is anticipated that the Bill will address the broad conditions under which a levy may be introduced, as well as the structure of the tax. Territorial extent and application

● This Bill will extend to England and Wales and apply to England only. 40 Key facts

● Mayors and local leaders in the UK are left far behind their international equivalents in their ability to raise revenue locally. According to the Organisation for Economic Co-operation and Development (OECD), the share of national taxes collected at the sub-national level in the UK is 5.8 per cent: just a fifth of the European Union average, and the lowest of the G7 by far. In France, the share is 20.4 per cent; in Japan, 36.0 per cent, and in the USA, 45.7 per cent.

● Extending the power to introduce an Overnight Visitor Levy will bring England in line with leaders in similar destinations. All other G7 countries already have some form of tourism or overnight accommodation levy in place. Some of these are well established – France has had an equivalent levy in place since 1910. Others are more recent: Norway, for example, is introducing their visitor contribution from summer 2026. Cities such as New York, Amsterdam, and Rome apply overnight charges to fund local services.

● Similar powers are used worldwide to support communities and the visitor economy. Visitor levies have supported projects from large scale infrastructure works, such as expanding the capacity of public transport networks, to attracting and supporting major cultural and sporting events, to smaller public realm improvements like street cleaning around tourist sites. The exact amount raised by local areas to support such projects in England will be dependent on decisions by mayors with their constituent authorities.

● Mayor of West Yorkshire, Tracy Brabin, said “Mayors have made a strong case for the introduction of this levy as the first step toward fiscal devolution, and we’re delighted the government has listened. By asking visitors to pay a small fee on overnight stays, we’ll be able to invest more into making our regions even better places to visit - driving tourism and growth, unlocking opportunities, and helping our businesses thrive. This is a further vote of confidence in devolution and shows the government is backing mayors to deliver our ambitions.”

● Mayor of London, Sadiq Khan, said “Giving mayors the powers to raise a tourist levy is great news for London. The extra funding will directly support London’s economy, and help cement our reputation as a global tourism and business destination.”

● Mayor of the Liverpool City Region, Steve Rotheram, said “Our visitor economy is worth more than £6 billion a year and supports over 55,000 local jobs. A modest levy is money that would stay local and be reinvested in the things that make our region stand out.”