Tourism is an integral part of the Welsh economy, attracting millions of visitors each year to its stunning coastline, historic castles, and vibrant cultural festivals. However, as the landscape evolves due to new legislation and economic pressures, businesses in this sector are encountering considerable challenges. Alun Evans, a partner at our Haverfordwest and Carmarthen offices, addresses the difficulties confronting businesses in the sector, discusses the introduction of a tourism tax, and offers suggestions for how businesses can mitigate the effects of these challenges.
Is it me?
Over the last couple of years, tourism businesses have been hit hard by changes in the tax system that include:
- 182-day rule for council tax/business rates
- Abolition of tax advantages for furnished holiday let businesses
- Increase in employers’ national insurance
- Increased capital gains tax on exit
- Increased inheritance tax (the ‘farmers tax’, which the press doesn’t make clear, applies to non-farming businesses as well)
Tourism businesses would be justified in thinking that they had been the subject of targeted legislation aimed at their business. That fear will no doubt be compounded by a new tax looming on the horizon:
Tourism Tax
The Visitor Accommodation (Register and Levy) Etc. (Wales) Bill was approved by the Senedd on 8 July 2025 and will allow local authorities to introduce a visitor levy, a charge on overnight stays in registered accommodations. The proposed rates are:
- £1.30 per adult per night for most accommodations
- 75p per adult per night for hostels and campsites
- Under-18s are exempt
The levy is expected to be introduced no earlier than 2027, as local authorities must consult with their communities before doing so. The revenue generated from this levy will be reinvested in local tourism infrastructure, which includes public toilets, footpaths, beaches, and visitor centres. This initiative aims to enhance the visitor experience and support long-term sustainability.
The Problems
While the tax aims to improve infrastructure, many businesses have voiced concerns over:
- Competitive pressures: Operators worry that the levy could deter visitors, especially when competing with regions that don’t impose similar charges.
- Administrative burden: Smaller businesses may struggle with the logistics of compliance and reporting.
- Perception risks: Tourists may view the tax negatively if its benefits aren’t clearly communicated or visible. The fear is that we may be sending a message that Wales no longer welcomes holidaymakers.
- Is it going to be introduced by local authorities? For example, although the messaging from Pembrokeshire County Council is that it will not be introduced in the current administration, there is no guarantee for the future.
- What happens if you use a letting agency? Will the letting agency administer this, or will it be the responsibility of the property owner?
Action points for businesses
To navigate these changes, tourism businesses can take proactive steps:
- Transparent Communication: Clearly explain to guests why the levy exists and how it benefits the local area. Framing it as a contribution to preserving Wales’ natural beauty and heritage can help shift perceptions.
- Collaborate Locally: Engage with local authorities and tourism boards to ensure funds are used effectively and visibly. Collective advocacy can help shape how the levy is implemented.
- Digital Preparedness: Ensure your business is listed on the national accommodation register and ready for digital compliance. This will be key to avoiding penalties and streamlining operations.
How Accountants Can Support Tourism Businesses
As trusted advisors, accountants play a vital role in helping tourism businesses adapt:
- Pricing & Cash Flow Management: Assist clients in understanding how to incorporate the levy into their pricing and financial planning.
- Compliance Support: Assist with registration, reporting, and understanding the legal obligations tied to the new legislation.
- Business Resilience & Diversification: Offer strategic advice on diversifying income streams and accessing loan finance, such as the £50 million Wales Tourism Investment Fund (WTIF), which provides patient capital of between £100,000 and £5 million for qualifying projects with repayment terms over 10-15 years and can include seasonality payment breaks.
Get in touch
If you require further assistance, please get in touch with Alun Evans on 01437 760666 or via email at alun.evans@bevanbuckland.co.uk.
