England Plans Nightly Tourist Levy on Hotels and Short-Term Rentals

Holidaymakers in England could soon pay a nightly levy on hotel and Airbnb-style stays under proposals ministers are set to outline, giving mayors new powers to charge visitors.

The idea, first raised by Keir Starmer's government in November and similar to a Scottish scheme, would let mayors set a fee for overnight stays and decide how to invest the revenue. It could raise hundreds of millions of pounds for transport and public services, but the hospitality industry fears it will add pressure after tax rises and higher employment costs announced in last year's budget.

Housing secretary Angela Rayner meets mayors on Thursday and is expected to say the levy will be a percentage of accommodation cost, not a flat fee, to protect budget holidays. Mayors will decide what suits their area, but ministers do not expect it to become overly expensive.

Allen Simpson, chief executive of UKHospitality, told BBC Radio 4's Today programme the plans would put jobs at risk in some communities and that Edinburgh's new tourism tax was "already having damaging effects." He said UK holidays were "already more expensive" than they appeared due to higher VAT. "What we're talking about here is an open-ended power for mayors to set tourism taxes at any level they want," Simpson said, noting that taxes in Paris, Rome and Berlin are capped. He added that holiday parks might not open in shoulder seasons and holidaymakers would have less money to spend.

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 fund tourism promotion. Last year other mayors, including Sadiq Khan in London, wrote to the culture secretary and then chancellor urging a visitor levy. Sources from the London mayor's office welcomed a percentage rather than flat fee, saying no decisions had been made on design or revenue allocation, but any levy would not exceed 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 power to implement visitor levies. In Wales, councils will be able to charge £1.30 per person per night for most accommodation from April 2027.

UKHospitality, representing thousands of restaurants, hotels and pubs, has said a 5% tourism tax would be one of Europe's highest and hit households struggling with the cost of living. It has written to Burnham urging a "holiday bonus" instead, under which central government revenues would be devolved to local authorities based on visitor numbers. Tourist taxes are common worldwide, used in cities such as New York, Barcelona and Venice to fund local services.