Visitor Levy for visitor accommodation providers: technical guidance - Who pays the levy

Whilst the levy is calculated based on the number of nights a visitor is entitled to reside at a premises under a contract, the liability for the levy rests with the visitor accommodation provider.

So, if a principal council introduces the levy, it is the visitor accommodation provider who is responsible for paying the levy on an overnight stay to the WRA. Visitor accommodation providers can choose to ‘pass’ the costs of the levy on to visitors, however there is nothing requiring them to do so in legislation. Regardless of this choice, the visitor accommodation provider must pay the levy to WRA for each liable overnight stay at their premises.

A visitor accommodation provider becomes liable to pay the levy on an overnight stay in visitor accommodation when the overnight stay has taken place and the entitlement under the contract to stay at the accommodation ends. Therefore, when a visitor accommodation provider comes to file their Visitor Levy return, they will self-assess the total amount of levy that is payable during that accounting period. This will be based on the number of overnight stays they have had under a contract during that period.

As the WRA will collect and manage Visitor Levy on behalf of all principal councils that introduce the levy, visitor accommodation providers that operate across multiple areas in Wales where the levy applies will only need to file Visitor Levy returns and pay any levy due to the WRA.

For example, Marie stays in a cottage in an area where Visitor Levy applies. She stays there for a week by herself. The liability for Visitor Levy under the contract for Marie’s weeklong stay arises when Marie's entitlement to stay has ceased under the contract, which is generally known as the point of ‘checking out’ of the premises.

Visitor accommodation providers can decide whether they will pass on some or all the cost of the levy on to visitors. In some cases, visitor accommodation providers who use booking platforms or travel agents may have the levy collected for them by the platform or agent.

A visitor accommodation provider who passes the cost of the levy on to visitors may decide when to collect it from visitors. In practice, an amount covering the levy may be collected at:

• the time of booking the visitor accommodation
• when the balance for the trip is paid
• at check-in
• during the booked stay, or
• on check-out of the visitor accommodation

It’s best practice for visitor accommodation providers who pass the cost on to customers to be clear that:

• the price they are charging includes the levy, and
• the total price they customer will pay

Whilst the levy does not need to be separately itemised in these situations, visitor accommodation providers and visitors may find it helpful to do so for transparency.

To help visitor accommodation providers in complying with Visitor Levy, they may need to:

• update their listings
• check existing pricing rules, so that the visitor knows the total price they are paying to the provider, and
• update terms and conditions of bookings, as well as invoices and receipts to show that the levy is included in the total price, if the cost is being passed on

Visitor accommodation providers may also want to update their websites, advertisements and promotional material, and other channels they use to help inform visitors.

Where the visitor accommodation provider has decided to pass on some or all of the cost of the levy onto the visitor, the visitor accommodation provider still remains liable for the levy arising on that stay, once it has taken place, and is responsible for remitting the amount of levy to the WRA.

If a visitor refuses to pay the levy, then it is a civil matter, and the visitor accommodation provider will need to decide whether they absorb the cost of the levy themselves or cancel the booking.

In the UK, VAT is generally charged at 20% on the price paid for the supply of taxable goods or services, which may include certain taxes, levies and charges.  

Not VAT registered

If you are not VAT-registered and pass on some or all the levy to the visitor by increasing the amount you charge, it will count towards your taxable turnover. Visitor accommodation providers that are not VAT registered will need to be mindful of the VAT threshold set by UK Government and whether they have a future need to register for VAT with HMRC.

Speak to an accountant or HMRC if you have questions about registering for VAT or the VAT rules.

VAT registered

In the case of Visitor Levy, if a VAT registered visitor accommodation provider includes a Visitor Levy in the cost of the overnight accommodation, then this will form part of what is paid under a contract for the supply of accommodation. This portion of Visitor Levy will be subject to the same VAT liability as the accommodation.

VAT will be due on the total amount the visitor pays to the visitor accommodation provider in return for the overnight stay.

If the accommodation provider passes on some or all of Visitor Levy to the visitor by increasing their charge for the overnight stay then the increased price remains liable to VAT, as it will form part of the overall payment from the visitor to the provider. The accommodation provider will account for the VAT on their VAT return submitted to HMRC.

If the accommodation provider keeps their prices the same and absorbs the full cost of the levy themselves, there is no additional VAT liability, because the price charged to the visitor has not changed. VAT will continue to apply as normal on the charge to the customer.

Relief from VAT may be available for certain accommodation types for periods of stay beyond 28 consecutive nights. See VAT Notice 709/3 or contact HMRC for advice.

Individuals or companies who calculate their profit for income or corporation tax purposes using accountancy rules would normally exclude Visitor Levy from the calculation of profits (in the same way that VAT is excluded from that calculation). This treatment is acceptable and means that Visitor Levy has no impact on the amount of taxable profit.

Individuals who use the cash basis may choose to include or exclude the amount of Visitor Levy from the calculation of taxable profit. If they include Visitor Levy, they receive as income, then they will also have to include Visitor Levy they subsequently pay to the WRA as a cost. This should leave them in the same overall position as those who exclude Visitor Levy entirely.