England to Introduce Local Tourist Levies on Overnight Stays

Holidaymakers will face a nightly levy on hotel and Airbnb-style stays across large parts of England in a move welcomed by many mayors but described as risking “irreparable harm” to the tourism industry.

Regions across England will be able to charge an uncapped “tourist tax” on overnight stays to potentially generate tens of millions of pounds that would then be spent in those areas.

The move will bring England into line with many European nations and the US, where holidaymakers have for years been paying overnight visitor levies.

However, tourism and hospitality bosses warned it would have a “hugely damaging” impact on an industry already under pressure from a rise in tax and employment costs.

UKHospitality, the industry’s trade body, said a 5% overnight levy across England could result in 33,000 job losses and a £2bn hit to the economy, with regions more reliant on tourism, such as the Lake District, being worst affected.

The owner of Premier Inn, Britain’s biggest hotel chain, said it would be “hugely damaging” and urged ministers to “avoid inflicting what could be irreparable harm on this large and vital sector of the economy”.

The proposal for an overnight levy was backed by Keir Starmer’s government in November and is similar to a scheme running in Scotland.

Angela Rayner, the housing secretary, outlined the details behind the levy to England’s regional mayors in a meeting at No 10 North in Manchester on Thursday.

Under the proposal, which is expected to be introduced as a bill in parliament within months, mayors will be given the power to decide what is best for their area, but ministers do not expect the levy to become overly expensive.

Allen Simpson, the chief executive of UKHospitality, said the plans would put jobs at risk in some communities, and that the new tourism tax in Edinburgh was “already having damaging effects”. He told BBC Radio 4’s Today programme holidays in the UK were “already more expensive” than they appeared because of higher VAT.

“What we’re talking about here is an open-ended power for mayors to set tourism taxes at any level they want,” said Simpson. “And remember that if you go to Paris, if you go to Rome, if you go to Berlin, you’re paying a small tourism tax, but it’s capped.”

He added: “It will be the case that you’ll have holiday parks which can’t open in the shoulder seasons, and of course people who go on holiday will just have that little bit less money in their pocket.”

The overnight visitor levy was outlined in the king’s speech in May, but legislation was not brought forward before Starmer stood down as prime minister. Andy Burnham is likely to pitch the policy as part of his wider devolution agenda. No 10 has previously said local leaders would be “able to set out plans for how revenues will be invested by March 2028”.

As mayor of Greater Manchester, Burnham introduced the city visitor charge in April 2023 – a £1 per room per night fee – to pay for measures aimed at attracting more tourists. Last year other mayors, including Sadiq Khan in London, wrote a letter to the culture secretary, Lisa Nandy, and the then chancellor, Rachel Reeves, urging the government to introduce a visitor levy.

Sources from the London mayor’s office said plans to make the payment a percentage rather than a flat fee was welcome. No decisions had been made on the design of the scheme or how revenues would be allocated, they said, but any levy would not be more than 5% of accommodation costs. “This will really help us support London’s growth and our offer to visitors,” they said.

Edinburgh became the first city in Scotland to introduce a tourist tax, at 5% in July, after the Scottish parliament passed a law last year granting councils the power to implement their own visitor levies. In Wales, councils will have the power to charge £1.30 a person a night in tax for most accommodation from April 2027.

But UKHospitality, which represents thousands of restaurants, hotels and pubs, has said a levy of 5% would be one of the highest tourist tax rates in Europe and hit households continuing to struggle with the cost of living. It has written to Burnham urging him instead to consider plans for a “holiday bonus”, under which central government revenues would be devolved to local authorities based on the number of visitors they attract.

Tourist taxes are common in Europe and the rest of the world, and are used in cities such as New York, Barcelona and Venice to fund local services.