England’s mayors are set to be given the power to introduce a tourist tax on overnight stays, as the government seeks to give local leaders greater control over tourism revenue and how it is spent.
The proposed Overnight Visitor Levy would allow regional mayors to impose a charge on accommodation stays, with the money raised retained locally and reinvested according to priorities determined by local leaders.
The policy, a “tourist tax,” represents a significant shift in how tourism could be funded across England, potentially making holidays more expensive in areas where mayors choose to adopt the levy.
Under the plans, the levy would be calculated as a percentage of the cost of accommodation rather than imposed as a fixed amount. The government has argued that this approach would provide greater protection for people taking lower-cost holidays, as the charge would rise or fall according to the price of the accommodation.
The government is expected to provide further details after Housing Secretary Angela Rayner meets mayors on Thursday.
According to a government source, decisions over the levy should ultimately reflect local circumstances, noting that it “will be up to local leaders and local voters” in England “to decide what is right for their area.”
The proposed levy was included in the King’s Speech in May as part of the government’s legislative programme, signalling an intention to provide local authorities with new powers over tourism-related taxation.
However, the policy is yet to be translated into legislation. Sir Keir Starmer had previously intended to introduce legislation establishing the levy before he was replaced as Prime Minister by Andy Burnham, but the bill has not yet been brought forward.
The policy is now being advanced within a wider push to transfer greater decision-making powers from central government to England’s regions.
No 10 previously stated that local leaders would be “able to set out plans for how revenues will be invested by March 2028,” allowing mayors to link tourism income with local economic development and visitor infrastructure.
Devolution, Local Revenue and the Growing Push for a Tourist Levy
The proposed Overnight Visitor Levy has emerged from the government’s wider effort to strengthen regional decision-making and give mayors greater control over the economic development of their areas.
Under the planned arrangements, local leaders would be able to decide whether introducing a levy is appropriate, rather than having a single nationwide tourist tax imposed across England.
That distinction is central to the government’s argument for the policy. By allowing local leaders and voters to determine whether the charge is introduced, ministers are positioning the levy as part of a broader devolution settlement rather than simply as a new national tax on holidays.
For regional mayors, the attraction lies largely in the opportunity to generate additional revenue from the visitor economy. Popular tourist destinations can experience significant pressure on public spaces, transport networks and local services, while also requiring investment in attractions and infrastructure to remain competitive.
The proposed system would allow money generated by overnight stays to remain within the local area and be directed towards priorities identified by local leaders.
Andy Burnham already has experience with a similar model from his time as mayor of Manchester. In April 2023, Manchester introduced the City Visitor Charge, requiring visitors to pay £1 per room, per night. The charge was designed to fund measures aimed at attracting more visitors and strengthening the city’s tourism economy.
Manchester’s experience provides an example of how local authorities can use visitor-related charges to support tourism rather than simply treating them as a general source of taxation.
The proposed English-wide framework would, however, potentially give mayors considerably broader discretion because the levy would be calculated as a percentage of accommodation costs.
That approach is also intended to distinguish the proposed English system from a flat-rate charge. A fixed fee can represent a much larger proportion of the cost of a budget hotel or inexpensive accommodation than it does for a luxury stay. By linking the levy to accommodation prices, ministers argue that lower-cost holidays would face a smaller additional charge.
The position is especially crucial in London, where Mayor Sir Sadiq Khan has expressed support for a tourist tax on overnight visits. Central London Forward, which represents 12 central London local councils, projected in January that a 3% fee on the cost of a room, including hotels and short-term rentals, could generate more than £350 million in revenue for the capital each year.
Such cash might represent a significant new source of support for a city whose economy is heavily reliant on international tourism and corporate travel.
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