Representative ImageThe Chancellor of the Exchequer, Rachel Reeves, presented her 2025 Autumn Budget to Parliament on 26 November and published supporting documents on the gov.uk website.
The UK's Autumn Budget announced that regional mayors in England will gain the power to introduce a visitor levy, or tourist tax, on overnight stays in hotels, holiday lets, and B&Bs. This new tax, which could range from £1 to £5 per night, aims to generate revenue to support local economies and infrastructure from tourists. At the same time, it has announced major multi-year funding settlements for mayors to invest in skills, business support, transport and local growth. However, any negative impact on consumer demand for holidays would directly contradict the Chancellor’s own growth agenda. Does the Budget risk taxing growth in UK Tourism?
The UK's 2025 Autumn Budget has elicited varied reactions from industry leaders, primarily concerning the proposed tourist tax and broader economic implications for the travel sector. Let us find out what the industry reactions are to this Autumn Budget.
Mark Tanzer, ABTA Chief Executive, said: “Against a difficult economic and fiscal backdrop, it will take some time to assess the impact of Budget. But what is clear, is that the success of the travel industry has never been more critical to the overall health of the UK economy.
Support through lower level of business rates welcome
As such, the move to support high street businesses, including travel agencies, through a permanently lower level of business rates, is very welcome. However, ABTA remains concerned about the cumulative impact of taxes and levies on travel businesses and consumers.
Negative impact on consumer demand for holidays should be avoided
The introduction of a wide range of new taxes and tax increases, largely targeted at middle- and higher-income earners, is something that will need to be monitored carefully. With travel powering the UK economy over recent years, any negative impact on consumer demand for holidays would directly contradict the Chancellor’s own growth agenda.
Similarly, changes to employment and business taxes, including further increases in the National Living Wage, especially for younger workers, will increase the cost of employment. The government must be careful not to deter businesses from hiring staff, especially those younger people who are looking to start their careers in travel. However, there were also some positive moves in this area, including enhanced access to apprenticeships for SMEs.”
New tax, risks creating confusion and additional costs for the industry
Rob Russell, CEO of AC Group, comments on the proposed taxation of hotel rooms announced in UK’s Autumn budget:
“While a hotel tax may seem intended to align the UK with other European, it must be implemented carefully. It’s important to note that this would apply to every hotel guest - corporate visitors, meetings and events, domestic travellers, or families staying overnight - not just tourists. Tourism, particularly inbound tourism, is vital to our economy, and any new tax risks creating confusion and additional costs for an industry still recovering from the impact of COVID-19, which received little targeted support for inbound tourism. In most destinations where similar taxes exist, the charge is offset by a lower rate of VAT on accommodation, which is not currently proposed here.
Tax needs to be transparent and proportional
If introduced, the tax must be transparent, proportional, and clearly communicated well in advance, allowing businesses and operators to plan accordingly. Percentage-based charges could create significant practical difficulties for operators like AC Group, who work with international tour operators and pre-packaged travel, where rates for hotels, flights and transfers are agreed months in advance. For example, a small fixed rate, such as £2 per night, could be manageable, but a one-size-fits-all approach risks adding another fee to what is already an expensive destination compared to most of Europe.
We need clarity on the process - who collects the tax, how it is applied, and how it is passed on to consumers - to avoid unintended consequences. Any measure must support a sustainable tourism sector rather than inadvertently placing additional burdens on visitors or businesses.”
Pay-per-mile scheme for EVs would slow the shift towards greener choices
Responding to the newly announced EV investment + proposed pay-per-mile scheme in the budget and its broader implications for the wider chauffeur and taxi industry, James Dow, General Manager UK & IE at Blacklane, said:
“The new pay-per-mile scheme for electric vehicles (EVs) risks undermining efforts to drive greater EV adoption, potentially slowing the shift towards greener choices. This is especially a risk in a city such as London that will also be hit with the removal of exemption for EVs in the Congestion Charge zone from next year.
Policy needs to support high EV adoption
“We encourage sustained policy-maker investment and collaboration with industries driving high EV adoption, as well as individual EV owners. This should include enhancing public charging infrastructure, reviewing VAT on public charging as a priority, and targeted support for those now facing higher ownership and running costs ensuring that momentum in EV adoption is supported, and not lost.
“Blacklane is engaged in conversations with our chauffeur partners to fully understand the impact of these changes, and to develop meaningful incentives to ensure EVs are an attractive option to professional chauffeurs. Despite operating environment challenges, we remain committed to EVs remaining the dominant vehicle type on our platform throughout the UK.”
