We explain the Welsh Government’s new tax and its potential impact on the marine sector in Wales
Author and Key Contact: Sian Reynolds
Sian Reynolds outlines the potential impacts of the proposed Visitor Accommodation (Register and Levy) Etc. (Wales) Bill on the Marine Sector and Marine Tourism in Wales and also the efforts being made to minimise the impacts of the Bill. Read more to find out the potential changes to marine tourism tax.
On the 25th November 2024 The Welsh Government introduced the Visitor Accommodation (Register and Levy) Etc. (Wales) Bill which has potential implications to both the Marine Sector and Marine Tourism in Wales.
The Bill plans to introduce a Welsh Tourism Tax and it is likely to come into force in 2027. The purpose of the Bill is to allow principal local authorities to introduce a Levy made up of;
- an overnight visitor accommodation charge of up to £1.25 per person/per night; and
- a discretionary premium that may be added to the proposed accommodation charge.
The Bill also includes proposals for a compulsory register to be introduced for all Welsh Visitor Accommodation Providers (VAPs) by 2026. Where principal local authorities introduce the Levy, VAPs will be liable to pay the Levy and make returns to the Welsh Revenue Authority for each accounting period. Failure to comply with these requirements, will attract financial penalties. Of the 22 principal local authorities in Wales, 16 have a coastline.
There are two main concerns with the proposals contained in the Bill as they have the potential to adversely affect business in the Marine Sector and also Welsh marine tourism more generally.
Firstly, whilst it is pleasing to note that berth and mooring agreements are not currently included in the Bill’s description of “visitor accommodation”, Clause 40 enables Ministers to extend the power of the Act to include “berths and moorings provided for vessels”. If the extension of power was made, marinas and other mooring providers would be liable to pay the Levy.
It seems at odds to conflate the provision of a berth or mooring with the provision of visitor accommodation, and this view is shared by British Marine.
Secondly, Section 2(e) of Part One of the Bill includes within the meaning of “visitor accommodation”, vessels that are “permanently or semi-permanently situated in one place, and made available (whether permanently or from time to time), on a short-term basis, for the purposes of business or leisure travel or educational trips“.
The Bill goes on to state that a vessel, is not visitor accommodation, if it is not permanently or semi-permanently situated in one place.
It seems to follow good sense that where a vessel is permanently positioned for the purpose of charging for overnight visitor accommodation (e.g. floating lodges/pods or AirBnB type boats) it is reasonable for the Levy to be charged. However, unlike the well-recognised and accepted forms of overnight accommodation (e.g. hotel rooms, campsites etc) the primary function of a vessel is navigation / waterborne transport, not overnight accommodation.
In summary, it seems essential to make the case that;
- berths and moorings provided for vessels should forever be excluded from the Bill;
- any vessel that is not permanently situated in one place, should not be charged the Levy; and
- the term “semi-permanently” be removed from the Bill to avoid hire boat and charter yachts from being caught by the Levy.
The Senedd has issued a Call for Evidence to help inform the initial scrutiny of the Bill by its Finance Committee (Stage1). It is essential that first hand evidence of the impact of the Bill is submitted as part of the consultation. The consultation period ends at 5pm on Friday 10 January 2025. Having taken evidence, the Committee will then report to the whole Senedd on the general principles of the Bill which will influence subsequent changes to the Bill. A final vote will likely take place in the summer of 2025 with the registration for all accommodation providers to start in 2026.
The Welsh Marine Sector is not alone in the challenges faced by the proposed Bill. Scotland recently introduced a Scottish Visitor Levy which raised similar concerns to those outlined in this article. British Marine and the Royal Yachting Association contributed to the consultation of the Scottish Bill and succeeded in convincing the Scottish Government to remove berths and moorings from their bill.
British Marine, The Royal Yachting Association, Royal Yachting Association Cymru Wales and the Welsh Tourism Alliance are preparing to make the same contributions that were made in Scotland, to the Senedd on behalf of the Welsh Marine Sector to persuade the Finance Committee and other Members of the Senedd of the need to amend the Bill to avoid the Levy being unfairly applied to leisure marinas, hire boat and yacht charter companies operating in Wales.
It is hard to think of any justification for ever making vessels not permanently in one place together with berth and mooring providers liable for a visitor tax. It is essential that using a vessel for the very purpose for which it was built, navigating our waters, is not taxed and that our Marine Sector and Marine tourism here in Wales continues to flourish.
For additional reading, please see below:
- Business Wales Article
- Welsh Government statement on the Bill
- The Finance Minister’s presentation of the Bill to the Senedd
- Wales Online coverage of the Bill
Please submit your first-hand evidence and have your say on the Bill by 5pm on 10 January 2025 here.
If you have any queries about how the Bill may affect your business or if you have any other marine sector queries, please do get in touch with Sian Reynolds.
