British families taking budget caravan and camping holidays could face effective tax rates of up to 100 per cent under Labour’s proposed overnight visitor levy, leading holiday operators have warned.
Labour is considering plans that would give mayors new powers to impose charges on overnight stays in their areas.
Industry figures say a flat‑rate levy, currently under discussion, would hit lower‑cost accommodation hardest.
Under such a model, visitors would pay the same charge per night regardless of what they paid for their stay.
Operators argue this would disproportionately affect families choosing cheaper breaks while having a far smaller impact on guests staying in luxury hotels.
Industry representatives said a family staying on a £10‑a‑night campsite pitch could face a levy equal to the full cost of their accommodation, while a family paying £1,000 a night for a luxury hotel room would face a negligible effective rate.
Any levy would be charged on top of VAT already applied to accommodation.
Jon Hendry Pickup, chief executive of Butlins, warned the proposals could place an additional burden on families seeking affordable breaks.
He pointed to more than 45,000 customers who booked term‑time breaks in 2025 at £49 for four nights for a family of four.
“If the Government levies £2 per person per night, the holiday tax would add £32,” he said.
“This is a 66 per cent tax on our best‑value breaks, hitting working families the hardest.”
Simon Palethorpe, chief executive of Haven, raised similar concerns.
“On some of our entry‑level holidays, a family of four could see the price increase from around £49 to over £80 — a 65 per cent increase,” he said, warning the additional costs could make domestic breaks unaffordable for many.
Debbie Walker, director‑general of the Holiday and Residential Parks Association, said the plans risked “pricing some people out of breaks at a time when money is tight”.
Research published last month by Oxford Economics estimated that a visitor levy could lead to 33,000 job losses and reduce Gross Domestic Product (GDP) by £2.2billion.
Tourism accounts for around five per cent of the UK economy and supports approximately 2.4 million jobs, with the sector expanding at 9.3 per cent annually, outpacing wider economic growth.
Allen Simpson, chief executive of UKHospitality, urged ministers to drop the proposals.
“Holidays are for relaxing, not taxing,” he said, arguing that visitors to Britain already face “one of the highest tax rates for visitors in Europe”.
Labour has rejected criticism, saying it is too early to draw conclusions because no final model has been agreed.
A spokesman said: “Speculation because the final design of the visitor levy has not been decided,” adding that the policy would help ensure “local people benefit even more from tourism to their area”.
Ministers have previously indicated they favour a percentage‑based model rather than a flat‑rate charge, arguing it would be fairer for visitors staying in lower‑cost accommodation.
Percentage‑based visitor taxes already operate elsewhere: Edinburgh charges five per cent, Aberdeen applies seven per cent, and Amsterdam levies 12.5 per cent.
According to GoCompare, the average week‑long family staycation costs £2,765.
A levy equivalent to Amsterdam’s 12.5 per cent rate would add around £345 to that holiday.
