Key facts
- Mayors 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.
- Similar levies are already in place in Scotland, 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, a move that could significantly increase holiday costs and generate revenue for local services. The policy details are expected to be formally set out by the Ministry of Housing, Communities and Local Government as early as Thursday.
The tax would allow mayors to charge a fee to visitors staying overnight, with revenue intended to be invested in transport and public services. The levy would be charged as a percentage of the accommodation cost, rather than a flat fee, to protect budget holidays. Mayors would have the discretion to decide what is best for their local area, but ministers do not expect the levy to become overly expensive.
The hospitality industry has expressed strong opposition, warning that the tax could lead to substantial job losses and make holidays in the UK even more expensive. Allen Simpson, chief executive of UKHospitality, stated that the plans would put jobs at risk and that holidays in the UK are already more expensive due to higher VAT. He also noted that tourist taxes in European cities like Paris, Rome, and Berlin are typically capped, unlike the proposed uncapped power for English mayors.
Similar levies are already in place in Scotland, with Edinburgh charging a 5% tax capped at five nights. Wales is also set to introduce a capped levy of £1.30 per person per night from April 2027. UKHospitality estimates that replicating Edinburgh's 5% approach across England could result in a £1.6 billion tax hit to the industry and lead to tens of thousands of redundancies.