The cost of holidays in the UK could be affected by announcements made in the Chancellor’s Budget yesterday.
Mayors will be given the power to impose an unlimited ‘overnight visitor levy’ on stays in hotels, B&Bs and holiday lets from 2028 – which could set families back an extra £100.
Officially uncapped, Labour regional mayors across England have said they will limit it at 5 per cent.
But UKHospitality has said this additional tax could add £100 for a family of four spending £2,000 on a 14-night break, Sky reported.
UKHospitality said a levy of £2 per person, per night would mean a family of four paying £112 extra for a break of this length – or £100 when capped at 5 per cent.
Mayors and leaders can decide whether to introduce a levy and how the revenue should be invested in their area, in consultation with their residents and local businesses.
However, not all leaders will implement the tax.
Chancellor John Healey announced updates to tourism in yesterday’s Budget
The Budget could affect the cost of flying, too.
Families booking a long-haul holiday next summer could face a £503.90 tax charge for two children in premium economy, while the same children would be exempt in economy, as per AirAdvisor’s latest analysis.
The difference applies to departures from England to destinations including the US, India and much of the Caribbean from April 1, 2027.
It comes from an existing Air Passenger Duty rule that removes the exemption for under-16s when they travel above the lowest cabin class.
The Budget confirmed a further increase from April 2028, taking the combined charge for those two children to £519.54. That is an increase of £15.64 on the 2027 figure, not a new £519.54 charge introduced by the Budget.
What other Budget announcements will affect tourism and hospitality?
Minimum wage will increase 3.9 per cent from £12.71 per hour to £13.20.
UKHospitality CEO Allen Simpson said this minimum and national living wage uplift ‘will add further pressure for hospitality businesses already grappling with substantial increases in costs’.
An ‘overnight visitor levy’ could set families back an extra £100 on UK holidays
He said: ‘This is the first Budget in several years to deliver any positive news for hospitality at all, and it shows that forceful, sustained sectoral campaigning works. We must carry on going to win the VAT cut we so badly need.
‘The change to hospitality business rates across England is important. For hospitality and leisure businesses across England, rates will either be frozen in real terms, reduced or cut to zero for two years from April. That is meaningful progress.
‘But we have a hill to climb: today was a first step towards fairness, and we have to be clear that there is a lot more to do.’
Julia Lo Bue-Said OBE, spokesperson for The UK Outbound Travel Group and CEO of Advantage Travel Partnership, added: ‘The Chancellor has missed a clear opportunity to back travel, a sector that is already delivering the growth this Government wants to see.
‘If ministers are serious about boosting the economy and easing pressure on household budgets, they should start with the costs they control directly, such as Air Passenger Duty, which is set to rise again next April and will only push up the cost of holidays for hard-pressed families.
‘The 3.9 per cent increase in the National Living Wage from April 2027 will also add to employment costs.’
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