Migrant hotels exempt from 'unlimited' tourist tax - despite British holidaymakers having to pay levy

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They will be exempt because they are designated as 'temporary accommodation'

Migrant hotels will be exempt from Andy Burnham’s unlimited tourist tax on hospitality, despite British holidaymakers having to pay the levy, it has been revealed.

More than 16,000 asylum seekers were housed in around 160 hotels across the country at the end of June 2026.

They will be exempt because they are designated as "temporary accommodation".

The Department for Housing, Communities and Local Government told the Telegraph that the fee would not apply to taxpayer-funded asylum hotels.

Chris Philp, the shadow home secretary, told the publication: "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."

Reform's Lee Anderson took to social media, 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 government has pledged to end the use of hotels to house asylum seekers by 2029.

Currently, over 73,000 migrants are in other taxpayer-funded accommodation, such as former military barracks.

More than half of asylum seekers have illegally entered Britain, largely on small boats across the Channel.

The Prime Minister is set to hand mayors the power to pile unlimited taxes on tourists, potentially adding hundreds of pounds to the cost of a family holiday in England.

The revenue is intended to shore up struggling council budgets.

The proposals, shared with mayors last week, sparked fury in the hospitality sector, with industry figures warning the move would directly undercut Labour's efforts to tackle youth unemployment.

The UK hospitality industry contributes between £93billion and £96billion a year to the economy and employs up to 3.6 million people.

Shadow Chancellor Andrew Griffith warned the unlimited tourist tax will be "hugely limiting for the chances of the young people who might otherwise be employed in tourism and hospitality".

Tees Valley Mayor Lord Houchen said: "The overnight visitor levy is just a back door created by the Labour Government to tax businesses even more than they already do. This will add cost to do business, cost jobs and make it more expensive for families to holiday in the UK."

Britons visiting sick family members in hospital are likely to be forced to pay the tax on any hotel stays, even though they are not tourists.

Sir Keir Starmer first proposed local tourist taxes in 2025, and both Ms Rayner and Andy Burnham, during his time as Manchester Mayor, were also prominent advocates for the policy.