Tourist Tax: What Does It Mean for Young People and Their Finances?

Tourist tax is not a new concept. Many countries across the world already use an additional levy to help fund the upkeep of cities and tourist destinations. However, with the UK Government set to give councils new powers to charge an additional levy on hotel stays, despite vowing to cap it at 5% (Ewan Somerville, 2026), what financial impact could this potentially have on young people and the wider community?

Hans Van Leeuwen reported for The Telegraph (2026) on Amsterdam and how its use of tourist tax could provide an indication of the approach UK councils may take. Amsterdam’s tourist tax is expected to rise to a hefty 20% by 2031, on top of the national government’s decision to increase VAT on hotel stays from 9% to 21%.

Although these increases have not yet appeared to deter tourists, the chairman of the Amsterdam branch of Dutch hotel lobby group Koninklijke Horeca Nederland (KHN), Pim Evers, believes this year could mark a shift. Pim stated in the Financieele Dagblad newspaper:

“You can already see that conferences are starting to be held in other cities. This affects not only hotels but also taxis and public transport, culture and retail.”

He accused Amsterdam’s municipal authorities of becoming a “cash cow”, rather than focusing solely on their aim of reducing tourist numbers to 20 million a year. His argument is that the impact is being felt beyond hotels, affecting the wider industries and businesses that rely on tourism.

Matthew J C Evans, writing for the Oxford Mail, reported on Dominic Paul, Chief Executive of Whitbread, and the difficult decision to close restaurants across the country, resulting in the loss of 3,800 jobs. The closures were linked to the impact of increased taxes and a lack of support within the sector. Growth in the hotel industry has also reached a standstill, with Mr Paul telling The Sunday Times:

“A number of future sites we have been looking at are not going to go ahead because of the business rates increase.”

“And this new levy makes it even more difficult for us to invest.”

The Financial Reality for Young People

Immediately, this poses a real challenge, with young people potentially being impacted from both sides. Higher business tax rates could mean fewer job openings or a continued risk of redundancies. At the same time, as the cost of living continues to rise, customers may find that they can no longer afford to support the hospitality sector in the same way.

UKHospitality Chief Executive Allen Simpson said the Government must make it more economically viable for businesses to employ young people, pointing to the loss of around 100,000 hospitality jobs following the 2024 Budget and higher employer National Insurance contributions

He said:

“Rising employment costs are reducing job opportunities, particularly for young people. The solution is to reduce the cost of employment and make it economically beneficial for businesses to create roles. Alongside this, better use of pre-employment training and Apprenticeship Levy funding can help more people become work-ready and move into hospitality jobs.”

The other side of the argument is affordability. Young people may also feel the impact when it comes to staycations, whether that is a short weekend break, attending a festival or gig, watching a sporting event or simply travelling to see friends. Tourist tax could therefore affect young people at a time when financial stability is already difficult to maintain.

Increasing the cost of hotel stays could discourage young people from travelling around the UK and potentially contribute to a wider gap in domestic tourism. This is particularly relevant for seaside towns such as Blackpool, where popular resorts that once attracted large numbers of visitors during the 1970s and 1980s have faced significant decline.

In a report by Martha Gill, neighbourhoods on the coast were found to be 42% more likely to experience deprivation. This is a worrying statistic for towns that were once heavily reliant on tourism and highlights the wider economic importance of maintaining a strong domestic tourism industry.

Managing Your Money in a Changing Economy

Managing finances is important, but it also shouldn’t come at the cost of stopping young people from maintaining social lives. As the economy continues to adapt, understanding inflation and the next steps to combat the reducing value of finances becomes increasingly important.

Jo Thornhill from Forbes reported on the 2026 Finder survey, which found that 18–24-year-olds have average savings of £2,699, and this figure jumps significantly to £11,023 for 25–34-year-olds. This displays steady growth as careers start to develop, but the next step is how these finances can be utilised.

Identifying saving methods that beat the rate of inflation has become increasingly important in modern-day society. Dan McGrath from MoneyAge reported that nearly 70 million savings accounts in the UK are earning less than the rate of inflation. This adds up to a total of around £600 billion sitting in accounts paying less than 3% interest.

Despite this, data from Moneyfacts indicates that about four in five individual saving product options on the market still beat inflation, giving the extra boost for savers to actively switch providers where necessary (O’Connor, 2026).

Saving and Investing

Naturally, accumulating cash to save from paycheques has been advised by many professionals, such as Martin Lewis, who goes over the best way to utilise this through MoneySavingExpert. Choosing how best to maintain and grow your money is important. Many high street banks might only give a boosted rate for a single year to beat inflation, which, if left in these accounts past the promotion, could potentially reduce the value of your finances against inflation.

Savings accounts are still vitally important. Using either a Cash ISA or a fixed-rate savings account can often provide a higher return, but these can also come with the downside of not being able to access your money for a set term. Easy-access accounts are still the standard for those who want access to cash at all times, so this route is about identifying the best provider on the market which offers this.

Moving beyond everyday savings can naturally lead individuals to look into potential investments. Depending on an individual’s risk, different investment tools can be used to potentially increase returns on sitting finances. Whether the stock market, cryptocurrency or something less volatile is more in the interest of the individual will depend on their own circumstances and attitude towards risk.

Every individual financial portfolio will be different, and many success stories in the past involving highly volatile investments such as Bitcoin should be taken with extra caution. What works for one person may not necessarily work for another, particularly when different levels of risk are involved.

For those seeking more protection when it comes to investing, Structured Solutions can also be an alternative to consider. With the potential for higher returns compared to some ISAs and savings accounts, alongside different levels of protection depending on the product, they can suit certain financial portfolios well.

Structured Solutions can take different forms, with Structured Deposits offering a more cautious approach for investors who want to protect their initial capital. Structured Deposits provide investors with the peace of mind that investments up to £120,000 per counterparty are protected, subject to eligibility criteria. Typically, Structured Deposits will match or beat the interest rates of Cash ISAs available on the market. For cautious investors looking to protect their initial capital while still having the potential for upside gains, these products can be a desirable option.

For investors who are willing to take on a little more risk, Structured Products offer a different approach. Structured Products do not have FSCS protection in the same way that eligible Structured Deposits do. They can, however, include protection barriers designed to combat a certain level of drop in the market, depending on the specific product. This can provide an extra level of protection compared with investing directly in stocks, where investors can see the value of their investment fall if there is a decline in the market.

Investing does carry risk, and professional financial advisers should be consulted prior to any investments.

References:
Evans, M. J. C. (2025), “UK restaurant boss slams ‘tourist tax’ after 3,800 jobs lost,” Oxford Mail.

The Telegraph (2025), “Europe’s tourist tax addiction is a warning for Britain,” The Telegraph.

The Caterer (2025), “UKHospitality: Reduce employment taxes or risk youth joblessness ‘national crisis’,” The Caterer.

Gill, M. (2025), “British seaside towns are sinking,” The Observer.

BBC News (2025), “Labour mayors in England vow to cap tourist tax at 5%,” BBC News.

McGrath, D. (2025), “70 million savings accounts earn less than inflation,” MoneyAge.

Thornhill, J. (2026), “Average Savings By Age In The UK 2026,” Forbes Advisor UK.

O’Connor, R. (2026), “20% of savings accounts not beating rising inflation,” FTAdviser.