The UK government has vowed to press ahead with plans to give mayors of major cities in England the power to introduce levies on overnight accommodation.
During the King’s Speech in the UK Parliament on Wednesday (13 May), the government confirmed that it would introduce the Overnight Visitor Levy Bill, despite strong opposition from business travel groups and the wider hospitality sector.
The proposals will allow the 13 Mayoral Strategic Authorities in England, which include London, Manchester and Liverpool, to impose local accommodation levies, which were first announced during last year's budget.
The government said such a move would bring England into line with “similar” destinations, such as New York, Amsterdam and Rome, which all have some form of accommodation levy or tax to help fund local services and projects. Other parts of the UK, including Scotland and Wales, have also already given their local authorities the ability to impose a levy on visitors.
Andrew Clarke, commercial director at the Business Travel Association (BTA), said the levy was a “significant concern” for the corporate travel sector.
“The concern is that these levies may appear modest individually, but the costs add up quickly for businesses managing large travel programmes,” added Clarke. “Combined with existing VAT and wider travel costs, there’s a real risk of making UK business travel significantly more expensive and more complicated to manage.
“There’s also a wider competitiveness issue here. Many European cities with visitor levies operate with lower hotel VAT rates than the UK, whereas these charges would sit on top of an existing 20 per cent VAT burden for hotels here.”
Clarke said the BTA was urging the government to “ensure business travel is properly considered as the legislation develops”.
Joss Croft, CEO of travel industry group UKinbound, said: “While we have not yet seen the detail of the legislation, UKinbound does not support further taxation on international visitors, who already contribute through one of Europe’s peak levels of VAT and some of the world’s highest visa and ETA fees and Air Passenger Duty.
“As these powers are taken forward, the devil will be in the detail, including ensuring any levy is simple to implement, creates no additional cost burden for businesses, and that revenues are clearly reinvested into the visitor economy.”
Allen Simpson, CEO of UKHospitality, warned that imposing an overnight levy would be “wildly unpopular, as well as economically destructive”.
“It is nonsensical for the government to go ahead with such an unpopular measure,” added Simpson. “There is still time for the government to think again and stop the tax.”
But London’s mayor Sadiq Khan welcomed the government’s move and said it would be “great news” for the UK capital.
“The extra funding will directly support London’s economy and help cement our reputation as a global tourism and business destination,” added Khan.
The government said it would “shortly” publish a response to a public consultation on the overnight levy, which was carried out earlier this year. This will include further details on the “design and implementation” of the levy.