Migrant hotels exempt from Andy Burnham’s tourist tax

Hotels being used to accommodate asylum seekers will reportedly not be subject to the new overnight visitor levy. “Temporary accommodation and shelters or refuges will not be subject to the levy, given they are clearly not used by visitors but are vital accommodation for vulnerable individuals and families,” Andy Burnham‘s Government said. The Conservative Party called the decision “utterly outrageous” adding that the tax will hit hard-working families most. As of June 2026, the Government was using just under 170 hotels to accommodate asylum seekers, down from a peak of around 400 in 2023.

The Government announced on Thursday that mayors and local leaders will be given new powers with a levy on overnight stays as part of a devolution drive to shift power out of Westminster. The new overnight visitor levy will allow mayors and other local leaders to charge visitors a percentage of the price of their accommodation, with the money raised intended to be spent on local services, transport, public spaces, culture and tourism. Mayors and leaders of Foundation Strategic Authorities can decide whether to introduce a levy and how the revenue should be invested in their area, in consultation with their residents and local businesses, the Government explained.

Chris Philp, the shadow home secretary, told The Telegraph: “It is utterly outrageous that families saving up for a break and struggling hospitality businesses will be hit with another tax, while hotels being used to accommodate illegal immigrants are exempt.

“British taxpayers should not be treated as a cash machine as asylum hotels get special treatment. Labour must explain why they think ordinary families should pay this tax but the asylum system should not.

“The answer is not another stealth tax on British families. We need to deport all illegal immigrants which would allow us to end the farcical hotel use entirely.”

According to the publication, people visiting sick relatives in hospital are likely to be forced to pay the tax on any hotel stays, despite not being tourists.

Reform’s Lee Anderson also took to social media by writing: “Migrant hotels to be exempt from Labour’s new tourist tax. The Government says this is because they are ‘temporary accommodation’.

“Well, it would also be temporary accommodation for British families wanting to go on holiday in the UK – but they’d apparently still be made to pay the tax. Looks like we now have two-tier Burnham! Reform’s solution: detain and deport all illegal migrants and axe the tourist tax.”

The UK government plans to end the use of hotels for housing asylum seekers by 2029.

James Cleverly, who resigned from the shadow cabinet at the end of last month to run for mayor of London, said: “Taxing hotels for hosting visitors and tourists but not for housing small-boat migrants is a perverse policy.

“Tourists spend money in the local economy, help keep our towns and cities vibrant and boost our prosperity. We should be encouraging them to come, not taxing them for the privilege.”

All 10 of Labour’s metro mayors have committed to capping any tourist tax at 5%. In a letter to Chancellor John Healey and Local Government Secretary Angela Rayner, the mayors said 5% represented a “reasonable ceiling” on the tax. The letter was signed by Labour mayors in London, Greater Manchester, Liverpool City Region, West Midlands, North East, West of England, West Yorkshire, South Yorkshire, East Midlands and York and North Yorkshire.

The average London hotel room cost around £282 per night last year including VAT, meaning a 5% levy in addition to VAT would amount to about £99 in additional costs for a seven-night stay, according to UKHospitality’s figures. Unlimited tax raising powers on family holidays will have a “genuinely catastrophic” impact, risking at least 33,000 jobs and costing more than twice the saving from the VAT energy cut, trade body UKHospitality warned.

Allen Simpson, chief executive of UKHospitality, said: “The millions of families who will be forced to pay significantly more for their holiday will hardly be comforted by their money going to prop up local government, when they’re struggling to make ends meet.

“The 33,000 people who could lose their jobs as a result of this tax, during an employment crisis, will be rightly furious. In a week when the Government has talked about growth, cutting red tape, getting people back into work and supporting hospitality, it is set to announce yet another tax that will do the absolute opposite.

“Give Mayors one tax-raising power on one sector and they will pull that lever until it snaps. You just need to look at the long list of Mayors already lining up to do just that. The Government claims this tax is normal. It’s not. There are scant examples of a destination with our 20% level of VAT and a holiday tax, for a reason. If it wants to use that argument, it should practice what it preaches and lower hospitality VAT to 10%, in line with Europe.

“It’s now more important than ever that the Budget reduces hospitality’s costs, given the holiday tax is set to increase them once again. Tinkering around the edges is not enough. There has to be a substantial reduction in hospitality’s tax burden next month. Cut VAT, fix business rates and reduce NICs.”