The announcement by the Westminster Govt that they would be introducing legislation to allow Mayoral and Foundation Strategic Authorities to introduce a Visitor Levy was made on Thursday 10 September. This applies to England only. The announcement said it would be based on a percentage model, and that the percentage would be uncapped. Mayors in favour quickly responded saying that they would try to stick to a ‘modest’ 5%. 5% is actually 6% when VAT is added, a tax on a tax.
You can read the Government Statement on the Levy here: https://www.gov.uk/government/
You can read our FAQ’s (Frequently Asked Questions, on the Levy here: https://www.pascuk.co.uk/
We will be updating the English Visitor Levy Page this week so bear with us.
Tourism is worth £147 billion a year to the UK economy – 5% of GDP, around one in every 15 jobs, and £52 billion in tax revenues to government in 2024 alone.[1] Our members want thriving, well-funded destinations as much as any council or government. But PASC UK does not support Overnight Visitor Levies (OVLs), and where they proceed, design will determine whether they strengthen the visitor economy or shrink it. On this page we make four key points: the sector is already under significant pressure; the impacts have not been accurately assessed; a levy creates identifiable risks that must be managed; and if levies go ahead, specific mitigations are needed.
Whilst it is clear that many Metro areas will go ahead with an OVL, there is still the opportunity to persuade Coastal and Rural Authorities not to. Evidence from Visit Britain and the New Economic Foundation shows that domestic visitor nights have dropped by 21% since 2022, and there is s shift from rural and coastal to urban and metro.
If introduced nationally, Data commissioned from Oxford Economics by UK Hospitality estimates 33,000 job losses if a 5% levy was introduced. The All Party Parliamentary Group (APPG) for Hospitality and Tourism held an Inquiry at which PASC UK gave oral evidence, highlighting in detail the challenges that the introduction of OVL’s would create. That can be accessed here
1 A sector already under significant pressure
Accommodation providers – most of them micro-businesses – operate on thin margins and many pay the full 20% rate of VAT on stays while most of Europe applies a reduced rate. A levy would not arrive on a blank slate; it lands on top of all the following:
[1] VisitBritain/VisitEngland, ‘The Economic Value of Tourism’, 2024 figures: visitbritain.org
2 The impacts have not been accurately assessed.
No national, sector-specific assessment of an OVL’s impact has been conducted; the work is left to individual local areas with limited experience of it. The evidence that does exist points to uneven effects: price-sensitive rural and coastal destinations, which compete on price, are more exposed than high-demand city markets, and a flat charge takes its largest share from low-cost stays, weighing most on lower-income families and off-season breaks. The Welsh Government’s own modelling projected job losses and significant administrative costs and assumed every county in Wales would adopt the levy, so the revenue implied would in practice be far lower while those costs would still apply. Decisions of this consequence should rest on evidence gathered before implementation, not discovered after it.
Some impacts will indeed depend on how levy income is spent, which is precisely why the governance safeguards in section 4 matter. Where outcomes are uncertain, that is an argument for assessing first and designing well, not for proceeding without evidence.
3 The risks that need managing.
- Economic risk. UK guests already pay 20% VAT on accommodation while most of Europe applies reduced rates of 5–15%; a levy on top could push the effective tax on a stay above 30%. The European Commission’s own study of tourism taxation, by PwC, found a strong empirical case for reducing taxes on tourists to keep destinations competitive.[1]
- Displacement risk – beyond leisure tourism. Mobile, overnight-dependent activity – conferences, festivals, touring productions, training contracts – can move, and the effect reaches sectors far beyond accommodation. On the day Edinburgh’s levy took effect, Scottish Ballet cancelled its performances between Christmas and New Year 2026 at the Festival Theatre, citing accommodation costs 72% higher than in 2019 and a touring bill above £200,000, and called touring to the city “fast becoming unsustainable”.[2] Separately, the Edinburgh TV Festival is leaving the city after 50 years for Greater Manchester, citing affordability and the rising cost of attending.[3]
- Operational risk. A patchwork of differing local schemes multiplies costs for micro-businesses and booking platforms alike; Germany’s roughly 30 different local systems have generated confusion and court cases.[4] Unless expressly excluded, levy income also risks counting towards the VAT registration threshold: a tax on a tax that could tip small businesses into charging 20% VAT on every stay.
- Governance risk. Without safeguards, levy income can quietly replace core visitor-economy budgets rather than add to them, and spending panels can become talking shops without real authority. Unmanaged overlap with ABIDs and voluntary giving schemes risks visitors being asked to pay twice, and businesses to collect twice.
- Reputational risk. A visibly rising cost of staying, without visible improvement in the visitor experience, damages destination reputations at home and abroad, precisely what levy income is meant to prevent.
4 If levies proceed: ten headline asks.
1 Assess first Sector-specific economic impact assessments before any levy, with HM Treasury methodology guidance developed with the industry. | 2 One national framework A single, consistent design across all adopting areas, not a patchwork of local schemes. |
3 Design for simplicity Rules that every booking system and micro-business can administer without disproportionate cost or burden. | 4 Ring-fence every pound Levy income spent only on the visitor economy that collects it – growth, skills, destination management. |
5 Guarantee additionality Core visitor-economy budgets must not be reduced. A levy provides additional revenue, never a replacement budget. | 6 Empowered forums Statutory public–private forums with real decision-making power over spend – building on Scotland’s Visitor Levy Forums – with accommodation providers, LVEPs and DMOs at the table. |
7 Fix the VAT interaction Levy income must not count towards the VAT registration threshold; no tax on a tax. | 8 One national exemptions policy Any exemptions (including the treatment of children and groups) decided once, nationally, on evidence, not area by area. |
9 Protect existing schemes No double charging alongside ABIDs and voluntary visitor giving; liability for accurate guest declarations rests with the guest. | 10 Review – and reverse Rolling three-yearly economic reviews, with the ability to suspend or withdraw a levy that is not working. |
[1] European Commission (DG GROW) / PwC, ‘The impact of taxes on the competitiveness of European tourism’, 2017: op.europa.eu
[2] Edinburgh Evening News, ‘Scottish Ballet calls for Edinburgh Visitor Tax relief after cancelling festive shows’, 24 July 2026: edinburghnews.scotsman.com
[3] Variety, ‘Edinburgh TV Festival Relocates to Manchester After 50 Years’, June 2026: variety.com
[4] Evidence to the APPG for Hospitality and Tourism from the German Hotel Association (IHA) APPG-visitor-levy-inquiry-meeting-minutes-23.06.2026.pdf