Tourist tax could be introduced in Nottingham to bring in extra £1.7m

City councillors are to discuss plans to introduce a nightly £2 levy on providers of accommodation in Nottingham, which could help bring in an extra £1.7m a year.

Similar tourist taxes are popular in European countries such as Spain, Germany, Belgium and France, but they are not currently permitted by law in the UK.

However, there is a legal workaround, and cities such as Manchester and Liverpool have utilised this to introduce a form of charge on visitors, often referred to as a ‘tourist tax’.

Business Improvement Districts (BIDs), non-profit organisations that are privately funded by businesses in the retail, hospitality and leisure sectors, are set up in cities to help encourage investment in and the growth of the local economy.

They are established through a referendum with businesses, and these must be held every five years.

Nottingham’s BID, ‘It’s in Nottingham’, is now looking to introduce what’s known as an ‘accommodation BID’.

Through an accommodation BID, It’s In Nottingham will be able to introduce a levy on accommodation providers, as has been done in Manchester and Liverpool in the past.

Reports, which will be discussed at a meeting of the full council on July 8, say: “The council has not yet seen the accommodation BID proposal, but it is understood that in voting for the BID, eligible accommodation providers will pay a mandatory levy that will be used to invest back into the city to deliver the proposed accommodation BID activities.

“The levy is based on a £2 per night, per room.

"This would be based on the occupancy levels of the accommodation providers and would be paid in arrears and reflect actual performance.”

Under the proposals, accommodation providers within the city boundary – that have a value of £35,000 and over – will be invoiced the BID levy by the economic development department at the council.

According to council documents, the total number of rooms that could be subject to the levy each day is 3,160.

At an assumed 75 per cent occupancy rate, which works out to around 2,370 rooms, roughly £1.73m could be raised through a nightly £2 visitor charge.

In Manchester, the levy is known as the ‘city visitor charge’, and participating businesses are encouraged to itemise it on guests’ bills.

The accommodation BID will be voted for by accommodation providers that fall into the relevant area.

It’s In Nottingham has indicated it would like a vote to be held in September, the council says.

Subject to a ‘yes’ vote, it is expected the accommodation BID will be established in 2025, running for an initial five years.

BIDs are managed, and BID levy rates set, by its own elected board and not by the council itself.

Levies typically fall on businesses, not on visitors, according to an article published in the House of Commons Library in October last year.

However, it is not clear in the council reports if accommodation providers will then have the ability to pass the levy costs on to visitors.