Plans to authorize mayors across England to introduce a levy on tourists are set to be unveiled on Thursday. Following a meeting between Housing Secretary Angela Rayner and regional mayors, the government is expected to provide further details on the proposed powers, which would allow local leaders to charge a fee to individuals staying overnight in their jurisdictions.
The concept, frequently referred to as a tourist tax, was initially proposed by Sir Keir Starmer’s government in November. Under the intended framework, local leaders would be responsible for determining how the generated revenue is reinvested in their areas.
A government source stated that it will be up to local leaders and local voters to decide what is appropriate for their specific region. The policy is presented as a component of the Prime Minister's broader devolution agenda, with previous indications from No 10 suggesting that local leaders would have the ability to establish investment plans by March 2028.
Unlike a flat fee, the levy is intended to be charged as a percentage of the accommodation cost, a design choice the government asserts will protect budget-conscious travelers. While there is theoretically no upper limit on the tax, ministers reportedly believe it is unlikely that mayors will set the rates at prohibitively expensive levels.
This initiative follows the mention of the Overnight Visitor Levy in the King's Speech in May. Sir Keir had planned to bring forward legislation to introduce the levy before he was replaced as prime minister by Andy Burnham, but the bill has not been brought forward yet.
Regional mayors have argued that such a levy is essential for raising income to support local priorities and stimulate economic growth. Andy Burnham, the Mayor of Manchester, previously introduced the City Visitor Charge in April 2023—a £1 per room, per night fee—to pay for measures aimed at attracting more visitors.
Conversely, the trade body UK Hospitality has raised concerns, warning that an additional tax could inflate the cost of holidays during a period of ongoing cost-of-living challenges.
The organization further cautioned that such fees risk discouraging domestic travel and undermining international competitiveness, particularly for families and younger demographics.
Similar schemes are already in operation elsewhere. In Scotland, local authorities have the power to introduce a visitor levy based on a percentage rate. Edinburgh became the first Scottish city to apply the tax in July, charging an additional 5% on top of booking costs for hotels, bed and breakfasts, and self-catering accommodation, capped at five nights. Glasgow is scheduled to introduce a 5% levy in January 2027.
Additionally, Wales is set to implement a capped levy of £1.30 per person per night in April next year. In London, Mayor Sir Sadiq Khan has expressed support for the measure, with analysis from Central London Forward suggesting a 3% levy could generate over £350 million annually for the capital.
These taxes are common in Europe and the rest of the world, with New York, Amsterdam and Rome applying overnight charges to accommodation stays to fund local services.
