England plans tourist tax on overnight stays, with no cap on rates

Visitors staying in hotels and holiday rentals in England could face an extra charge under government plans to let mayors introduce a tourist tax, The Times reported. The levy is expected to be no more than 5% of accommodation costs, but the proposed powers would place no legal cap on the rate.

The charge would cover overnight stays in hotels, Airbnb-style holiday lets, bed-and-breakfast establishments and guesthouses. Visitors would pay regardless of their nationality or reason for travel, meaning the levy would also cover domestic travellers and business trips.

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Mayors would set local rates and decide how to spend the revenue on local projects. According to the report, the tax is unlikely to come into operation before 2028.

The proposal would add to accommodation costs at a time when travellers already face higher prices. The Times cited VisitBritain data showing that the average hotel room price reached £198 in July, up 5% from a year earlier.

The final charge would depend on the rate chosen locally. While the report said rates were expected to stay at or below 5%, that expectation would not prevent mayors from setting a higher levy.

Mayors expected to receive the powers include those in London, Liverpool, Greater Manchester, the West of England, West Yorkshire, North East England, and York and North Yorkshire.

Manchester already has a £1-per-room nightly visitor charge at some hotels and apartments. The new levy would replace that charge, according to The Times.

London Mayor Sadiq Khan welcomed the proposal as a way to fund services and facilities used by visitors.

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“A well-designed, modest levy has the potential to provide an important additional source of funding to support growth, strengthen London’s offer to visitors and help us remain globally competitive. 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.

Hospitality businesses have raised concerns about the absence of a cap and the effect on travel costs.

England’s proposal follows similar measures elsewhere in the UK. Edinburgh began charging 5% of the net accommodation cost in July, with the levy applying to a maximum of five nights. Wales is due to introduce a levy of up to £1.30 per person per night from April 2027.

The proposed English powers would allow an overnight visitor levy to begin towards the end of the 2027-28 financial year, the report said. The timing and amount travellers pay would depend on how local leaders implement the measure.