Mayors Set to Gain Power to Levy “Tourist Tax” on Overnight Stays

Mayors across England could soon be handed the authority to charge visitors a new levy on overnight accommodation, under government plans aimed at giving local leaders greater control over funding for their areas.

The proposed charge, which has been widely described as a “tourist tax”, would allow local leaders to set an uncapped levy calculated as a percentage of the cost of a stay in hotels, bed and breakfasts and other forms of paid accommodation, rather than as a flat rate per night.

Ministers say the approach is designed to protect budget-conscious travellers, with the government stating it will ensure lower-cost accommodation always attracts the lowest charge, preventing cheaper stays from being hit disproportionately hard.

The additional revenue raised, according to the government, could be reinvested in local priorities such as high streets, transport links, public spaces and visitor attractions.

However, the plans have already drawn a sharp response from within the hospitality sector, with industry figures warning that an additional charge on accommodation could threaten jobs and add further financial pressure on families already grappling with the cost of living.

Government Says Decisions Best Made Locally

Local Government Secretary Angela Rayner said the measure was about putting decision-making in the hands of those who understand their areas best.

“This measure will give mayors the choice to raise and reinvest funding where it’s needed most,” she said. “It’ll help support the local services, public spaces and attractions that both residents and visitors rely on, with decisions taken by people who know their area best.”

The announcement follows a government consultation on the proposals held in 2025, and comes ahead of a Mayoral Council meeting at No10 North, where the new powers and their potential to unlock funding for regional priorities are due to be discussed.

Officials have framed the move as part of a wider programme of fiscal devolution, noting that England would be joining a number of other countries where similar visitor levies are already established, including cities across Germany, the United States, Italy, the Netherlands and Canada.

Sadiq Khan: London Levy “Needs to Happen Sooner Rather Than Later”

Mayor of London Sadiq Khan gave the proposals a strong welcome, arguing that the capital should be able to match the fiscal flexibility enjoyed by other major global cities.

“I strongly welcome the Government giving London the power to introduce an Overnight Visitor Levy. This needs to happen sooner rather than later,” Khan said. “London’s visitor economy is a huge success story, supporting jobs, businesses and investment across the capital and the wider country, and I have long argued that London should have the same flexibility as other major global cities to raise and invest funding locally.”

He added that a “well-designed, modest levy” could provide a valuable new funding stream to support growth and strengthen the capital’s appeal to visitors while helping manage the pressures that come with hosting tens of millions of tourists each year.

“It would allow us to reinvest in the places, infrastructure, culture and experiences that make London one of the world’s greatest cities to visit, while helping manage the pressures that come with welcoming tens of millions of visitors every year,” he said, adding that he would consult closely with London’s boroughs, accommodation providers, and hospitality and tourism businesses before any final decisions are made.

Hospitality Sector Warns of Economic Damage

The response from operators within the hospitality industry has been considerably more cautious. Paul Harper, commercial director at Daish’s Holidays, which runs 11 coastal hotels in locations including Bournemouth, Torquay, Newquay and Eastbourne, said the company opposed the plans outright.

“Daish’s Holidays… oppose plans to give mayors in England the power to introduce a tourist levy,” Harper said. “While we understand the pressure on local services, adding another tax on customers during a cost of living squeeze is not supportable and risks undermining the Chancellor’s ambition for ‘growth in every postcode’.”

Harper pointed to analysis from UKHospitality suggesting that even a modest 5% levy could strip up to £2 billion from UK GDP and place more than 30,000 hospitality jobs at risk, with coastal towns — including those where Daish’s operates — likely to bear the brunt of the impact.

“Even if Parliament grants these powers, further local decisions would be required before any levy could be introduced,” he said. “The priority should be making UK holidays more affordable and supporting the coastal economies that depend on tourism, not adding further costs at the point of booking.”

What Happens Next

Any introduction of an overnight levy would require both parliamentary approval of the new powers and subsequent decisions at local level before a charge could actually be applied in any given area. For now, mayors and local authorities will be watching closely as the government moves the proposals forward, while hospitality operators continue to press the case for affordability to remain the priority for the sector.