Earlier this week, the Government set out plans for an overnight visitor levy, allowing mayors to charge people staying in hotels, B&Bs, holiday lets and other accommodation.
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Charged as a percentage of the accommodation cost, local leaders would decide whether to introduce it in their areas and how the money raised is spent.
While there is currently no national cap on the level of the charge, some Mayors pledged not to implement a holiday tax higher than 5% following the announcement.
After the Prime Minister asserted tourist levies were common overseas, UKH challenged mayors to back the sector’s call for a 10% VAT rate, noting similar rates for hospitality are also standard across Europe.
Legislative change
In a letter sent to mayors on Friday 11 September, UKH chief executive Allen Simpson urged the Government to make two commitments as a condition of introducing the levy.
“First that you support a 10% VAT rate for hospitality to bring us in line with our major competitors and commit to not implementing a holiday tax until we have secured that change,” he wrote.
“Second that you support a cap in legislation on a holiday tax at no higher than 5% to prevent the inevitable creep in the level as years go by.”
Simpson went on to explain a family from Bootle, for example, visiting Manchester, could face a tax burden of around 27% on their hotel stay, whereas a trip to Berlin would incur only 14.5% under the current proposal.
He continued: “You have all said it is commonplace around the world to have these taxes.
“But as you know, it is also commonplace for the VAT on holidays to be far lower than in the UK. In France, Spain, Germany, and Italy the VAT is 10% or lower but here we charge a full 20%.
Shrinking tourism
“The only countries who charge 20% VAT along with a holiday tax are countries trying to shrink their tourism sector.”
The comments come as support for the #VATsTheProblem campaign, spearheaded by celebrity chef Tom Kerridge and calling for a permanently lower rate of VAT for hospitality, continues to grow.
- Sign the petition here
Simpson further pointed to Prime Minister Andy Burnham’s public support for a VAT rate more in line with Europe before taking office.
“Devolution is the future,” he added. “But hospitality cannot afford to pick up so much of the bill.”
“This proposal commits the Government to a joined-up package of devolution rather than simply tax rises. I hope you can join us in calling for genuine parity with Europe.”
UKH previously estimated the levy, set to be implemented towards the end of the 2027-28 financial year, could put 33,000 hospitality jobs at risk and cost the economy £2.2bn.
- The letter can be read in full here
