Ministers are paving the way for a tourist tax on overnight stays in England, with mayors set to charge a percentage of accommodation costs rather than a flat fee.
The levy could add hundreds of pounds to the price of an extended break, particularly in expensive destinations. There would be no national upper limit on the rate, although major Labour-led city regions are expected to keep charges at or below 5 per cent in the immediate term. ([gov.uk](https://www.gov.uk/government/news/local-leaders-handed-powers-to-drive-investment-in-communities))
Hotels, bed and breakfasts, short-term lets and other commercial accommodation would be covered by the scheme. Providers would be responsible for collecting the money and paying it to mayors and strategic authorities.
London Mayor Sadiq Khan has welcomed the move and is preparing for the capital to introduce its own overnight visitor levy. Analysis by GLA Economics suggested a 5 per cent charge could raise about £543 million a year for London, while earlier estimates put the potential figure at close to £580 million.
City Hall has already approved up to £792,000 for a team to develop the London scheme, including research, consultation and work on how it would be administered. The mayor’s office says the levy could help fund the capital’s visitor infrastructure, attractions and public spaces. ([london.gov.uk](https://www.london.gov.uk/md3467-establishing-tourist-levy-project-team))
The Government says charging a percentage of the accommodation bill will protect cheaper breaks from the disproportionate impact of a flat nightly fee. Angela Rayner, the Housing Secretary, said local leaders should be able to raise and reinvest money in the services, public spaces and attractions used by residents and visitors. ([gov.uk](https://www.gov.uk/government/news/local-leaders-handed-powers-to-drive-investment-in-communities))
Money raised could be spent on high streets, public transport, events and tourism facilities, with mayors expected to publish detailed spending plans by early 2028. A bill to establish the new powers is due to be introduced in Parliament.
Hospitality businesses have warned that an uncapped levy could make holidays in England less competitive. UKHospitality has said a 5 per cent charge across England could cost the economy £2 billion and put 33,000 jobs at risk, while critics argue that most comparable cities impose limits on their visitor taxes. ([theguardian.com](https://www.theguardian.com/business/2026/sep/10/england-nightly-levy-hotel-airbnb-stays-tourist-tax-plans))
Edinburgh introduced a 5 per cent visitor levy on 24 July 2026, applying it to the first five nights of paid accommodation. The English proposals would give local leaders considerably more discretion over both the rate and how the proceeds are used. ([edinburgh.gov.uk](https://www.edinburgh.gov.uk/visitor-levy-summary))
