Holidaymakers in England could soon face a nightly tourist tax on hotel and Airbnb-style accommodations under new powers for mayors outlined by the government. According to official plans, the overnight visitor levy would be charged as a percentage rather than a flat fee, potentially raising hundreds of millions of pounds for local transport and public services.
Did You Know? Edinburgh became the first city in Scotland to introduce a tourist tax, implementing a 5% levy in July after the Scottish parliament passed a law granting councils the power to run their own visitor schemes.
Mayors to Receive New Powers for Overnight Levies
Housing Secretary Angela Rayner is meeting mayors to outline the proposed tourist tax structure, which was first raised by Keir Starmer’s government in November. Under the developing plans, mayors will decide what is best for their local areas and how to invest the revenue raised. Ministers do not expect the levy to become overly expensive. No 10 previously stated that local leaders would be able to set out investment plans by March 2028.
The overnight visitor levy was initially outlined in the king’s speech in May, though legislation did not move forward before Starmer stood down as prime minister. Andy Burnham, who introduced a £1 per room per night city visitor charge in Greater Manchester in April 2023, is likely to pitch the policy as part of his wider devolution agenda. Last year, other mayors including Sadiq Khan in London urged the government in a letter to introduce a visitor levy.
Hospitality Industry Raises Alarm Over Costs and Job Risks
The hospitality sector has pushed back hard against the proposals, warning that additional fees will harm businesses already squeezed by budget tax rises and employment costs. Allen Simpson, the chief executive of UKHospitality, told the BBC Radio 4 Today programme that the plans would put jobs at risk in some communities and that Edinburgh’s new tourism tax was already having damaging effects. He argued that UK holidays are already more expensive than they appear due to higher VAT.
Expert Insight: While tourism levies are standard practice across major international destinations like Paris, Rome, Berlin, and New York, introducing them across England introduces a complex friction point for an industry grappling with cumulative tax and labor pressures. The debate hinges on whether local infrastructure gains can outweigh the immediate financial strain on domestic travelers and regional operators.
Simpson also criticized the proposed framework for lacking a strict cap. He contrasted the English proposal with European cities, noting that while places like Paris, Rome, and Berlin charge small tourism taxes, those rates are capped. UKHospitality has urged Burnham to consider a holiday bonus model instead, where central government revenues are devolved based on visitor numbers.
Caps, Regional Comparisons, and Projected Implementation
Sources from the London mayor’s office welcomed plans to make the payment a percentage rather than a flat fee, stating that any London levy would not exceed 5% of accommodation costs. Officials noted that no final decisions have been made on the design of the scheme or how revenues will be allocated. Meanwhile, councils in Wales will have the power to charge £1.30 a person per night for most accommodations starting in April 2027.
Frequently Asked Questions
How much could the tourist tax cost visitors?
Under current plans discussed by the government and London officials, the levy would be charged as a percentage of accommodation costs rather than a flat fee, with London sources indicating their levy would not exceed 5%.
Who will decide how the tax money is spent?
Mayors will have the power to decide how the revenue raised should be invested locally, with No 10 indicating local leaders would set out investment plans by March 2028.
Are tourist taxes used anywhere else in the UK?
Yes. Edinburgh introduced a 5% tourist tax in July following Scottish legislation, and Welsh councils will gain the power to charge £1.30 per person per night starting in April 2027.
How will local leaders balance the need for public service funding against the financial pressures facing the UK hospitality industry?
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