International and domestic travelers could soon face a “hotel tax” on overnight stays in the UK, as the Treasury explores new ways to strengthen public finances amidst rising borrowing costs.
The proposed tax, still under consideration, would follow the model of similar levies in countries like France, where nightly charges range from under A$2 at campsites to over A$25 at high-end hotels.
Chancellor Rachel Reeves, who introduced A$80 billion in tax hikes in the previous autumn budget, has promised not to repeat such measures. However, with borrowing rates at their highest since 2008, she may need to find alternative revenue sources.
The potential nationwide tax would affect both domestic and international tourists, building on regional efforts such as Wales’ planned A$3 nightly fee and Edinburgh’s upcoming 5% accommodation tax in 2026. The TaxPayers’ Alliance estimates that adopting the Welsh model across England could generate approximately A$1 billion annually, while a system similar to France’s could yield over A$2 billion.
Despite the backlash from the hospitality industry, Treasury officials have downplayed speculation about the hotel tax. A spokesperson reaffirmed the chancellor’s focus on fiscal responsibility and spending cuts, with a review of government expenditures scheduled for June to address inefficiencies.
Critics warn that introducing a tourism tax could harm one of the UK’s most vibrant industries, potentially deterring visitors and impacting the broader economy.
