Tourist tax plans for England set to be outlined

Plans are set to be announced on Thursday that would grant mayors in England the authority to impose a levy on tourists. This charge would apply to people staying overnight, with local leaders having discretion over how the funds generated are reinvested in their communities. The concept, often referred to as a “tourist tax,” was initially proposed by Sir Keir Starmer’s government in November and closely resembles a similar scheme already operating in Scotland.

The proposed levy would be assessed as a percentage of accommodation costs rather than as a fixed amount, a strategy intended to protect more affordable holiday options. Although there is no stated maximum limit on the tax, government officials believe that mayors are unlikely to set excessively high rates. More detailed announcements are expected following a meeting between Housing Secretary Angela Rayner and various mayors on Thursday. A government spokesperson emphasized that “it will be up to local leaders and local voters” to determine what arrangements suit their areas best.

This Overnight Visitor Levy, first mentioned during the King’s Speech in May, could lead to increased holiday costs in England if local officials choose to implement it. Sir Keir Starmer had intended to introduce legislation for the levy prior to being succeeded as Prime Minister by Andy Burnham; however, no bill has been presented so far. Prime Minister Burnham frames the policy as a component of his broader agenda to devolve power, with the government previously stating that local authorities would need to outline how the funds will be utilized by March 2028. Notably, Burnham’s experience includes Manchester’s City Visitor Charge, introduced in April 2023, which applies a £1 per room, per night fee to support efforts aimed at boosting tourism.

Regional mayors have voiced support for the levy, highlighting its potential to generate additional resources that could be invested in local projects and stimulate economic growth. However, the hospitality sector has expressed concerns. The trade body UK Hospitality warned that such charges could increase holiday expenses at a time when many households are struggling with living costs. It cautioned that these extra costs might harm the UK’s appeal to international visitors and discourage domestic tourism, especially among families and younger travelers. Tourist levies are not uncommon internationally; cities like New York, Amsterdam, and Rome have similar overnight accommodation taxes to fund local services. In the UK, the Mayor of London, Sir Sadiq Khan, endorses the idea, with analysis suggesting a 3% levy could raise over £350 million annually in the capital. Meanwhile, Scotland and Wales have already adopted or plan to introduce comparable visitor levies, including Edinburgh’s 5% tax capped at five nights and a forthcoming £1.30 per person, per night charge in Wales set to launch next year

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