Key facts
- Mayors and local leaders in England will be granted the power to introduce an uncapped "overnight visitor levy" on tourists.
- The tax will apply to guests staying in hotels, bed and breakfasts, and holiday lets.
- Revenue generated from the levy is intended to support local council budgets.
- The policy details are expected to be formally set out by the Ministry of Housing, Communities and Local Government as early as Thursday.
- The Mayor of London supports the new powers, estimating they could raise over £350 million annually for the capital.
- Scotland has implemented similar overnight visitor taxes, with Edinburgh charging 5% of the nightly accommodation cost, capped at five nights.
Mayors and local leaders across England are set to gain the power to introduce an uncapped "overnight visitor levy" on tourists, potentially increasing holiday costs significantly. The policy, which officials revealed last night, aims to generate revenue for struggling council budgets.
The hospitality sector has expressed strong opposition, warning that the tax could lead to substantial job losses, particularly among young people. Industry figures cited by The Telegraph and LBC stated that the move would create a "jobs bloodbath" and is a "back door" for the government to tax businesses further.
Sir Keir Starmer first proposed local tourist taxes in 2025, with Angela Rayner and Andy Burnham also prominent advocates. London Mayor Lord Khan has voiced support, estimating the tax could raise over £350 million annually for the capital. Similar levies are already in place in Scotland, with Edinburgh implementing a 5% charge capped at five nights. Wales is set to introduce a capped levy of £1.30 per person per night next April.
UK Hospitality estimates that replicating Edinburgh's approach across England could result in a £1.6 billion tax hit to the industry and lead to tens of thousands of redundancies. The trade body also pointed to the National Insurance increase on employers as a significant contributor to job losses in the sector. A government source indicated that while central government will set the framework, local leaders and voters will decide on implementation.