Tourist tax explained: what it could mean for your holiday - plus 50 ways to cut the cost of a staycation

A new tourist tax could soon be introduced in parts of England. What would it mean for your next holiday, how much could it add to the cost, and what can you do to keep your staycation bill down?

The prime minister is set to give England’s mayors the power to introduce an uncapped tourist tax, officially known as an overnight visitor levy.

But the charge would not automatically apply everywhere, and the amount you could pay would depend on whether your local mayor chooses to introduce one, and at what rate.

Here’s what you need to know, followed by 50 simple ways you can save money on your next staycation.

What is a tourist tax?

A tourist tax, often officially referred to as an overnight visitor levy, is a fee charged when you stay in short-term accommodation.

The money raised is typically reinvested by local authorities in public infrastructure, tourism and local services.

What’s been proposed?

Under the plans, mayors in England would be given the power to introduce an overnight visitor levy.

Local leaders would be able to charge the levy as a percentage of the cost of accommodation, including hotels, bed and breakfasts and other types of short-term accommodation.

But it would not be compulsory. Mayors would have the choice of whether to introduce a levy in their area.

A couple of mayors have already said they do not intend to introduce one.

Meanwhile, Labour mayors across 10 city regions have said they would voluntarily limit the charge if they do introduce it, after listening to concerns about the potential impact on visitors and businesses.

In a letter to chancellor John Healey and local government secretary Angela Rayner, the Labour metro mayors said 5% would represent a ‘reasonable ceiling’ for the levy.

What are the criticisms?

Hospitality leaders have criticised the plans, warning that an additional charge could put jobs at risk in some communities.

The boss of the hospitality trade body has also pointed to the experience of Edinburgh, where a tourism tax is already being introduced, arguing that it is having a damaging effect.

There are concerns that anything which makes overnight stays more expensive could leave visitors with less money to spend elsewhere, whether that’s on meals, attractions, shopping or other local activities.

The counterargument is that the money raised could be reinvested locally, helping to improve the infrastructure and services that tourists themselves use.

How much could it add to the cost of your holiday?

The levy would be based on the overall accommodation cost, rather than being charged per person.

There would also be no proposed cap on the number of nights you could be charged for.

Hospitality chiefs have suggested the tax could add £100 to £200 to the cost of a holiday. But, the reality is that we simply don't know yet.

The amount would depend on whether a mayor introduces a levy and, if so, what percentage they choose to charge.

For example, a theoretical 5% levy on a midweek room at a budget hotel costing around £74 could add about £3.70 a night.

If two people were sharing the room, that works out at £1.85 each.

At the other end of the scale, a twin room at a luxury hotel in London costing around £1,300 a night would attract an additional £65 under a 5% levy.

So while a tourist tax could make some holidays noticeably more expensive, the impact will vary enormously depending on where you stay, how much your accommodation costs and how long you stay.

Whether a tourist tax eventually affects you or not, there are still plenty of ways you can cut the cost of a UK break.

50 ways to save money on your staycation

Savings on booking and accommodation

1. Compare prices across platforms such as Tripadvisor, Airbnb and Booking.com.
2. Book directly with the hotel, you may get a better rate or extra perks.
3. Travel off-peak, including midweek and outside school holidays, if you can.
4. Stay outside the main tourist hotspots and explore lesser-known areas nearby.
5. Consider camping or glamping, which can offer a lower nightly cost.
6. Split a cottage rental between family or friends.
7. Choose self-catering accommodation so you can prepare some of your own meals.
8. Look for last-minute deals if your dates are flexible.
9. Check cancellation policies so you can rebook if the price drops.
10. Ask about discounts for NHS workers, students, military personnel or senior citizens.
11. Use cashback websites when booking accommodation.
12. Redeem hotel loyalty points or reward vouchers.
13. Stay longer — weekly rates can sometimes work out cheaper than paying night by night.
14. House-sit or pet-sit in exchange for free accommodation.
15. Consider a home swap with someone elsewhere in the UK.

Savings on food and drink

16. Take food and drinks with you rather than buying everything in expensive tourist areas.
17. Shop at budget supermarkets such as Aldi or Lidl before you set off.
18. Plan your meals in advance to avoid impulse spending.
19. Pack lunches and snacks for day trips.
20. Take a refillable water bottle rather than repeatedly buying bottled water.
21. Look for local deals, including ‘kids eat free’ offers and happy hours.
22. Check voucher websites such as Groupon before booking restaurants or activities.
23. Eat out at lunchtime, when set menus and special offers can be cheaper.
24. Share large portions or order sides instead of individual mains.
25. Avoid tourist-trap restaurants around major attractions.

Savings on travel

26. Car-share and split the fuel costs with family or friends.
27. Fill up before you leave, as motorway service-station fuel can be more expensive.
28. Drive smoothly and stick to speed limits to help reduce fuel consumption.
29. Check fuel prices before setting off and plan where to fill up.
30. Use a Railcard if you’re eligible for discounted train tickets.
31. Book trains early to take advantage of cheaper advance fares.
32. Consider travelling by coach, which can often be cheaper than the train.
33. Compare train fares before booking.
34. Use public transport instead of paying for expensive parking.
35. Walk or cycle locally where practical.
36. Pre-book parking where possible to secure a cheaper rate.
37. Avoid toll roads if there’s a suitable free alternative.

Savings on activities and entertainment

38. Visit free attractions, such as beaches, parks and countryside walks.
39. Explore free museums and galleries in towns and cities.
40. Look for free local events and festivals taking place during your stay.
41. Consider a city tourist pass if you plan to visit several paid attractions.
42. Book attraction tickets online in advance if doing so gets you a discount.
43. Look for family or group tickets rather than buying individual tickets.
44. Check discount platforms such as Wowcher for deals.
45. Bring your own entertainment, such as games, bikes, swimming gear or snorkels.
46. Make use of memberships you already have, such as National Trust or English Heritage.

Smart planning tips

47. Set a daily budget before you go and try to stick to it.
48. Track your spending on your phone throughout the trip.
49. Avoid peak travel days, particularly Fridays and Sundays, when prices can be higher.
50. Look for package deals that combine accommodation with activities or attractions.

A tourist tax could add another cost to some UK holidays, but you don't necessarily have to let it blow your budget.

With a little planning there are plenty of ways you can make your staycation cost less.