Tourist tax would hit consumers with £1.6 billion tax rise

01 Apr 2026

The government's proposed tourist tax would constitute a £1.6 billion tax increase for holidaymakers, according to analysis by Oxford Economics.

The modelling, which was commissioned by UKHospitality, assumed a 5% levy is fully realised by 2030.

It showed a £2.2 billion reduction in GDP, £1.6 billion tax bill for UK holidaymakers, £688 million in reduced tax receipts for the Treasury and a loss of £101 million in direct investment from hospitality and tourism businesses.

The modelling by Oxford Economics also considered, a £2 levy per person per night and a £2 levy per room per night. All scenarios resulted in a reduction in GDP, tourism spending, nights spent in accommodation and total jobs.

Allen Simpson, Chief Executive of UKHospitality, said: 'The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism.

'There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs and taxi firms, the impacts are stark and indiscriminate.

'Taxes up, jobs lost and our high streets hit once again. Holidays are for relaxing, not taxing. The government should keep it that way and stop the holiday tax.'