Mayors in England are set to gain powers to introduce an overnight visitor levy under government plans aimed at giving local leaders greater control over tourism revenue.
The proposed tourist tax would be charged as a percentage of the cost of hotels, bed and breakfasts and other accommodation, rather than as a flat fee. There would be no national cap on the rate.
Housing Secretary Angela Rayner is due to discuss the plans with mayors at a virtual meeting at No 10 North on Thursday.
Local leaders would decide whether to introduce the levy and how the revenue would be spent. A government source said the decision would be left to “local leaders and local voters”.
Hospitality industry warns of higher costs
UKHospitality has criticised the proposals, warning that they could increase the cost of family holidays and put jobs at risk.
Chief executive Allen Simpson estimated that the levy could add between £100 and £120 to the average family holiday in England. He also warned that local authorities facing financial pressures could have an incentive to set the rate too high.
Simpson said higher costs could affect holiday parks and reduce spending by visitors.
Conservative shadow housing secretary David Simmonds also criticised the plans, arguing that hotels already face a 20% VAT rate.
Reform UK leader Nigel Farage said his party’s mayors in Greater Lincolnshire and Hull and East Yorkshire would not introduce the levy, describing it as a “holiday tax”.
Mayors back greater local control
The proposed levy forms part of the government’s wider devolution agenda.
Regional mayors and leaders of Foundation Strategic Authorities would have to set out by March 2028 how they intend to use the additional revenue.
South Yorkshire Mayor Oliver Coppard said Labour mayors would consult tourism and hospitality businesses before introducing any levy. Potential spending could include street cleaning and night bus services.
Mayor of London Sadiq Khan has said the policy should be introduced sooner rather than later. He is understood to support a maximum rate of 5%.
However, Westminster City Council leader Paul Swaddle warned that Westminster residents and businesses would see little benefit unless part of the revenue raised in London was shared with local councils.
Existing visitor charges
Manchester and Liverpool already operate voluntary visitor charge schemes, but these are business-led and regional mayors do not currently have the legal power to impose a compulsory levy.
Manchester introduced a £1 per room, per night City Visitor Charge, while Liverpool operates a £2 nightly charge. Hotels voluntarily collect and pool the money to support local tourism.
The proposed tourist tax would differ by giving local leaders the power to introduce a mandatory charge.
Similar schemes already operate in several European destinations and other parts of the world, including New York, Amsterdam and Rome.
Edinburgh introduced a 5% visitor levy in July for overnight stays in hotels, bed and breakfasts and self-catering accommodation, with the charge capped at five nights.
Wales is also due to introduce a capped visitor levy of £1.30 per person per night in April 2027, although individual local authorities will decide whether to implement it.
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