England's mayors to be given power to introduce tourist tax
The government is expected to outline how local leaders will be able to impose levies on overnight stays.
England's mayors are set to receive authority to implement a tourist tax, according to plans to be unveiled on Thursday. The proposed levy would apply to overnight guests, with local leaders determining the allocation of the generated revenue. Dubbed the "tourist tax," the concept was initially proposed by Sir Keir Starmer's government in November and mirrors a scheme currently operating in Scotland.
Rather than imposing a fixed fee, the tax would be based on a percentage of the accommodation cost, a measure intended to safeguard budget-friendly trips. There is no predetermined cap on the percentage, though ministers anticipate mayors will avoid excessively high rates. Following a meeting between Housing Secretary Angela Rayner and mayors on Thursday, the government will release further specifics.
The Overnight Visitor Levy, introduced in the King's Speech last May, grants local leaders and voters the discretion to determine the tax's appropriateness for their respective areas. The levy, expected to increase accommodation costs in England if enacted, was originally planned for implementation before Starmer's departure as prime minister, but the legislation remains pending.
The prime minister has positioned this policy as part of his broader devolution strategy, with No 10 previously stating that local leaders could outline plans for revenue reinvestment by March 2028. Manchester's mayor Sir Keir Starmer initiated the City Visitor Charge in April 2023, a £1 per room, per night fee aimed at attracting more visitors.
Regional mayors argue the levy is crucial for raising funds to invest in local priorities and spur economic growth. Nevertheless, the UK Hospitality trade body has cautioned that such a tax could elevate holiday expenses, potentially undermining international competitiveness and deterring domestic breaks, especially among families and younger travelers.
Similar taxes exist in Europe and globally, with New York, Amsterdam, and Rome employing overnight charges to fund local services. London Mayor Sadiq Khan supports a tourist tax on overnight visitors, anticipating the measure to generate over £350 million annually for the capital, based on a 3% levy applied to room costs, whether at hotels or through short-term rentals.
In Scotland, local authorities have the power to introduce visitor levies as a percentage of accommodation costs; Edinburgh implemented a 5% charge in July, capping the levy at five nights. Glasgow will introduce a 5% levy from January 2027, while Wales plans to implement a capped levy of £1.30 per person per night starting April 2024.
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