Each month the Scattered Clouds blog takes a look at the wonderful world of tourism through a data and evidence-led lens, all in pursuit of transforming tourism sector data into insight of course!

The approaching visitor levy era - December 2025

The government is consulting on its proposal to allow Mayoral Strategic Authorities in England (and potentially Foundation Strategic Authorities too) the power to create overnight visitor levies. Visitor levies are already lurking on the horizon in both Wales and Scotland.

By the time the consultation period ends on 18th February next year it’s likely the government’s mailbag will be bulging with responses. However, it now appears inevitable that before too much longer a visitor levy will be a feature of the tourism landscape across Britain.

It is unsurprising that most, though not all, Mayors, have indicated an eagerness to adopt a visitor levy. Their enthusiasm is almost certainly not born out of an innate desire to make visitors pay more for the privilege of visiting their patch. Rather it is a function of a prolonged real terms reduction in the amount of income local government has at its disposal, all while demand for the things it is legally obliged to provide such as adult social care has increased relentlessly.

Providing the stuff that matters to the visitor economy, whether that’s to do with culture and the arts or a local tourist board, are not legally mandated services so it’s reasonable for those overseeing the delivery of local government to seize an opportunity to bolster their dwindling finances in order to fund their deliver, although it’s unclear whether revenue raised will be ringfenced or simply get absorbed into general day-to-day spending.

It is true that visitors impose costs on an area as well as delivering benefits. These costs include direct impacts such as the creation of additional waste and litter that has to be collected, but also what economists term externalities, for example greater congestion on local roads that adds time, and cost, to journeys undertaken by residents.

Visitors benefit from the local amenities and infrastructure of the place that they are visiting, whether that’s parks, public transport or pedestrian signage, and it is often local taxpayers who are funding their upkeep or subsidise these services.

A levy, or to call a spade a spade, tax, can also be a tool policy makers opt to deploy in order to manage demand for a particular good or service where such an intervention is seen to be for the greater good, with alcohol and tobacco duties obvious examples. In the world of tourism a tax on visitors can be argued to be a way of protecting a fragile environment from too high a volume of visitors, for example in Venice. While this can be effective in reducing demand it has the unfortunate result of eroding the opportunity for those less affluent to visit the most popular destinations.

Advocates for a visitor levy regularly cite their prevalence across much of Europe and this is undeniably the case. However, it tends to miss the point that there are a wide range of taxes visitors to a destination are required to pay, and Britain is already at a competitive disadvantage in this regard

Some of the well-rehearsed arguments as to why the proposed visitor levy is unwelcome are based on the fact that visitors (both inbound and domestic) are already paying a higher rate of VAT than in just about any other destination in Europe and that cost pressures facing businesses have intensified due to the NIC changes of a year ago and trend for above inflation increases in the minimum wage.

A new kid on the block is that despite claims of supportive business rate decisions the bulk of hospitality venues are finding that the amount they are expected to pay in the next two or three years is going to rise substantially.

These cost pressures cannot be fully absorbed by businesses that often have wafer thin profit margins, and as such the prices charged to consumers will be increased even before any visitor levy is added into the mix.

For inbound visitors there are other taxes that add to the cost of visiting Britain, for example those needing a visa must pay £127 for a six-month visitor visa, while those who don’t need a visa must pay £16 to apply for an ETA.

Any visitor who is flying back home from Britain has to pay Air Passenger Duty, which from next April will range from £15 for someone heading back to Munich in economy class to a whopping £253 for someone flying back to Australia in premium economy.

Then there is the issue of tax-free shopping, which most of our competitors offer but Britain no longer does, thereby encouraging those who are looking to engage in plenty of retail therapy during a short-break to choose a destination that isn’t Britain.

Hardly surprising then that the last time the World Economic Forum crunched the numbers (in 2024) it ranked Britain’s travel and tourism offer as 113th out of 119 nations it analysed. Decisions taken in the past year or two are not likely to have bolstered our rank once the next set of league tables emerge, probably next spring.

A levy on overnight visitors can also have perverse impacts, for example encouraging visitors to stay in accommodation in a neighbouring municipality that perhaps doesn’t have such a levy, and drive in and out of the destination they are visiting each day, as opposed to staying there and being able explore on foot, thereby avoiding the need to use a car. Or it may result in what would have been an overnight trip turning into a daytrip instead, so denying the destination the revenue that would have accrued to local businesses courtesy of the overnight stay.

The government consultation has invited comments on some of the following points, though not all, so here’s a list of choices that need to be made when trying to design a visitor levy scheme:

Should a levy be per person or per room?

Should child visitors be exempt?

Should it be a per night fee that is capped to lessen the impact on long-stay visitors?

Should it be a fixed rate or a percentage of the room cost (the former being administratively simpler but the latter more progressive)?

How will it be uprated from one year to the next?

Is there a mechanism to ensure all forms of paid accommodation are included?

If there is a patchwork of local areas that do and don’t have the tax will visitors simply choose to stay in those that don’t?

What is the balance between day-trippers and overnight visitors, and might a shift towards more day-trippers simply exacerbate traffic congestion and reduce visitor spending?

How much will it cost to administer the scheme and who will be responsible for funding it and ensuring compliance?

Crucially perhaps is the issue of whether or not there is hypothecation, and if so, who it is that has a say in how the revenue collected gets spent – visitors may be more open to paying a levy if it’s clearly being used to enhance the visitor experience.

It is far easier to design a scheme badly, opening up a Pandora’s Box of unintended consequences, than to design a scheme well.

The overarching point worth reinforcing is that Britain is already perceived poorly for its value for money offer, and potential visitors put value for money at the top of their wish list when considering which destination to visit. A visitor levy risks further eroding our international competitiveness.