Travellers visiting London may need to pay a new 'tourist tax' soon

London is preparing to charge visitors a fee on overnight stays in hotels and short-term rentals such as Airbnbs, following a recommendation from a cross-party oversight committee of the Greater London Authority, according to a report by BBC. The proposed tax is expected to raise up to £240 million a year, based on estimates from the Centre for Cities.

London Mayor Sadiq Khan has expressed support for the proposal but said he would not comment on speculation until the UK Government confirms its decision. A spokesperson told the Local Democracy Reporting Service that “The mayor has been clear that a modest tourist levy, similar to other international cities, would boost our economy, deliver growth and help cement London's reputation as a global tourism and business destination.”

How the Levy Could Be Applied

The proposed London model would follow the percentage-based structure being implemented in Scotland. As per BBC report, the plan includes a 5% levy on average accommodation costs, which could amount to around £11.50 per night in hotels and about £10 per night in Airbnbs. Edinburgh’s 5 per cent tourist levy, which comes into effect next July, will apply to the first five nights of a stay.


Other major international cities already collect tourism taxes. New York City raises £493 million annually through its scheme, while Tokyo’s flat fee for all accommodation bookings contributes £35 million. In France and Italy, the rate varies depending on accommodation type, star category and location.

Economic and Policy Arguments Behind the Proposal

Andrew Carter, chief executive of the Centre for Cities, said: “The model the government should adopt is already underway in Scotland, where Edinburgh, Glasgow and Aberdeen are introducing levies valued at a percentage rate on overnight stays in hotels, B&Bs and short-let accommodation.” He added, “Hopefully, introducing a tourist levy is the start of a bigger programme of devolving tax and spending powers to the capital. London is the most productive big city in the UK, and devolving more fiscal powers would give the capital more policy tools to accelerate growth in the economy.”

England is currently the only G7 country where the national government restricts local authorities from imposing tourist levies. According to a BBC report, Chancellor Rachel Reeves is expected to allow the introduction of such taxes through the English Devolution and Community Empowerment Bill, which is moving through Parliament. A formal announcement is anticipated in the coming months.