Published on
November 29, 2025
The UK’s 2025 Budget brings significant changes that could reshape the tourism landscape. For the first time, local governments will be empowered to introduce a visitor levy — a tax on overnight stays in accommodations such as hotels, B&Bs, and short-term lets. While some believe this is a step toward better managing the tourism industry’s impact on local communities, others fear it could make the UK more expensive for tourists. In addition, hospitality businesses will benefit from permanent reductions in business rates, which will provide some relief amid rising costs in the sector. But how will these changes affect both domestic and international travellers?
New Taxes and Local Tourism
One of the most talked-about changes in the 2025 Budget is the introduction of the visitor levy, which grants local councils the ability to impose a charge on tourists staying in accommodation. The levy will vary depending on the region, but it is expected to range from £1 to £5 per night, depending on where the visitor stays. This measure could raise significant revenue for local governments, which could be reinvested into tourism infrastructure, including improving public services, transport systems, and preserving heritage sites.
The impact of this tax on visitors could be substantial, particularly for tourists staying in areas that are already expensive, such as London and Bath. For instance, families looking to travel to these popular destinations may reconsider their plans if the extra levy increases the overall cost of their stay. The worry is that the levy could discourage long-term visitors, making short stays more attractive and potentially reducing the length of time tourists spend in the UK.
Business Rate Reductions: A Lifeline for the Hospitality Sector
On the flip side, the government’s decision to reduce business rates for hotels, B&Bs, and hospitality venues is a welcome move for the struggling tourism sector. Hospitality businesses will see a permanent reduction in business rates, providing a financial cushion amid rising operating costs. This reduction is expected to benefit smaller operators, who have faced fierce competition from larger hotel chains and rising utility bills.
The reduced financial pressure could lead to more competitive pricing in the sector, making accommodations more affordable for UK visitors. For tourists, this could mean better deals for quality accommodation options, particularly in lesser-known destinations that rely on tourism for local economic growth. Local hotels and inns might also offer more attractive packages and incentives, especially for mid-week or longer stays, helping to spread tourism across the year rather than just during peak holiday periods.
How These Changes Impact Domestic and International Tourism
For domestic tourists, the changes could be a mixed bag. The visitor levy may make it more expensive for families or individuals to visit their favorite cities, but at the same time, the business rate reductions could help smaller businesses keep their prices in check. Areas outside London, which have traditionally been less expensive for tourists, might also benefit from the increased flexibility in pricing, allowing tourists to explore lesser-known parts of the country.
International tourists could find the UK more expensive in some respects due to the new levies, particularly if they are planning a multi-destination trip within the country. However, the ongoing reductions in business rates could help maintain the quality of services and accommodations across the UK, which could encourage longer stays. Additionally, with the UK’s diverse range of attractions, from historical landmarks to vibrant cultural experiences, international visitors will likely continue to see the UK as a top destination for travel.
Local Communities and Tourism Sustainability
The visitor levy aims not only to raise funds for local councils but also to manage the strain that tourism can place on local infrastructure and services. Overcrowding in popular tourist hotspots has been a concern in recent years, with some cities and towns struggling to cope with large numbers of visitors. By introducing this levy, councils can generate revenue to enhance public services, maintain the beauty of the area, and ensure that tourism remains a sustainable industry.
However, local residents in tourist-heavy areas may feel the impact of this change more directly. While the revenue will be used for local improvements, there is concern that the increased cost to visitors could lead to a reduction in overall visitor numbers. If travellers find alternative destinations that are less expensive, tourism-dependent businesses may face a drop in demand.
The Long-Term Impact: A Balancing Act
For now, it is unclear whether the new visitor levies will significantly discourage tourists or if the benefits of improved infrastructure and lower business rates will outweigh the costs. The key will be how local councils balance the desire to generate revenue with the need to maintain a welcoming environment for tourists. Over the coming years, the success of this initiative will depend on how the funds are allocated and whether the measures encourage longer stays, greater regional exploration, and higher-quality tourism experiences.
As Jane and Mark, a couple from Yorkshire, plan their next trip to Edinburgh, they’re uncertain about the added costs the visitor levy might bring. Still, they’re hopeful that their stay will contribute to the city’s development and ensure that future generations of tourists can enjoy Edinburgh’s historic charm. Whether for Jane and Mark or the millions of visitors expected to arrive this year, the future of UK tourism rests on striking the right balance between sustainability and accessibility.
While the UK Budget 2025 sets the stage for a more structured approach to tourism, the key to its success will lie in how these policies are implemented at the local level. Only time will tell how this balance impacts the overall visitor experience in the UK, but the measures introduced have the potential to reshape the country’s tourism landscape for the better.
