Britons and overseas visitors may soon find themselves paying a “hotel tax” on every overnight stay, under Treasury proposals designed to shore up the public purse as borrowing costs continue to climb.
The potential levy, part of “modelling exercises” carried out by officials, mirrors the tourist taxes in countries such as France, where the nightly charge ranges from less than £1 at a campsite to more than £12 in five-star accommodation.
Chancellor Rachel Reeves, who introduced £40 billion in tax increases at last autumn’s Budget, has repeatedly insisted there will be no repeat of those hikes. However, tumbling bond prices and the highest government borrowing rates since 2008 mean she may soon be forced to find new revenue streams. Analysts say that unless taxes rise or spending falls, Reeves risks breaching her self-imposed fiscal rules — a scenario that could further erode market confidence in the UK’s economic stability.
Under the prospective nationwide scheme, both domestic travellers and foreign visitors would pay an added charge on their nightly stay. This comes as several parts of the UK explore local tourism levies. Wales is proposing a nightly fee of £1.25 for visitors, while Edinburgh will introduce a 5 per cent tax on accommodation from July 2026. According to the TaxPayers’ Alliance, rolling out the Welsh model across England would net about £560 million a year. Adopting something closer to the French system, however, could yield more than £1 billion.
Hoteliers warn of detrimental consequences. Sir Rocco Forte, whose eponymous hotel group has a global footprint, argues the measure would be a “pernicious new tax” coming on top of increases in employers’ national insurance, rising air travel levies, and the scrapping of VAT refunds for foreign tourists. He believes it would hit the entire tourism supply chain — from restaurants and museums to taxi drivers and shops — as visitors rein in spending to offset the higher cost of accommodation.
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