Tourism left out of the Budget speech, but not out of the bill

Tourism was not mentioned once in today’s Budget speech. Yet the measures announced will add to the cost of running a visitor economy business, in England most of all.

The Tourism Alliance, which represents 60+ organisations across the UK visitor economy, has set out what the Budget means for the sector.

What changes

• Overnight Visitor Levy: every strategic authority in England will be able to charge a levy set as a percentage of the accommodation cost, with plans expected by March 2028. There is no statutory ring-fence for the revenue and no requirement for a local impact assessment.
• Wages: the National Living Wage rises 3.9% to £13.21 from April 2027.
• Energy: the business electricity discount is limited to manufacturers.
• Holiday lets: tax on property income rises by a further 2 percentage points from April 2027.
• Business rates: retail, hospitality and leisure rates are frozen in real terms for two years, 70,000 more small businesses will pay no rates, and pubs and most music venues get an extra 20% cut.

What’s missing: a VAT cut for tourism, action on visitor visas and new funding for VisitBritain.

Eddy Leviten, Executive Director of the Tourism Alliance, said:

“Tourism didn’t feature in the Chancellor’s speech, but it features heavily in the bill. A hotel in England could soon be collecting a visitor levy while paying higher wages and higher energy costs, and still charging 20% VAT on every room.

“The rates relief for smaller firms will help many businesses in our sector. But the levy is now real and the safeguards are not. Revenue should be ring-fenced in law, and every area should assess the local impact before it acts.

“At 106th of 110 countries for price competitiveness, the UK cannot keep adding to the cost of a visit. VAT on accommodation should come down to 10% before any levy takes effect.

“This is a £147bn industry that supports 2.4 million jobs and pays £52bn in tax a year. It deserves a place in the government’s plans, not just its revenue forecasts.”

The TA is gathering evidence from members on how these measures will affect their sectors and will use it to press government for a statutory ring-fence, local impact assessments, a VAT cut and targeted energy support.