The UK government’s proposed holiday tax could lead to a £1.6 billion tax increase for consumers, according to a new analysis by Oxford Economics commissioned by UKHospitality. The report predicts significant economic repercussions, including a £2.2 billion reduction in GDP, 33,000 job losses, and a £688 million decrease in tax receipts for the Treasury by 2030.

The analysis outlines the potential impact of a 5% levy on accommodation, which would also result in a £1.8 billion drop in tourism spending and 11.9 million fewer nights spent in accommodation. UKHospitality is urging the government to reconsider the tax, highlighting the detrimental effects on the hospitality and tourism sectors.

Allen Simpson, Chief Executive of UKHospitality, stated, “The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism.” He emphasised the widespread negative impact on coastal communities, city centres, and local businesses.

The modelling considered three scenarios: a 5% levy on accommodation, a £2 levy per person per night, and a £2 levy per room per night. Each scenario showed a reduction in GDP, tourism spending, and employment. Matthew Dass of Oxford Economics noted that the tax would weaken the UK's competitiveness and place additional pressure on consumers.

Industry leaders, including Simon Palethorpe of Haven and Simon Vincent of Hilton, echoed concerns about the tax’s impact on domestic tourism and investment. Fiona Eastwood of Merlin Entertainments warned that the tax could make short breaks unaffordable for many families, affecting regional economies.

UKHospitality is calling on consumers to oppose the tax by contacting their MPs, aiming to protect the British holiday experience and support the economy

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