The government is set to hand England tourist tax powers to regional mayors, allowing them to charge visitors a percentage-based overnight levy on accommodation with no upper cap, under plans to be announced on Thursday. Housing Secretary Angela Rayner is meeting mayors virtually at No 10 North to set out the details of the Overnight Visitor Levy, a measure that has drawn sharp criticism from the hospitality industry and opposition parties alike.
The levy would apply to hotels, bed and breakfasts and other accommodation, and would be set as a proportion of the room rate rather than a flat fee per night. Ministers believe the percentage structure will protect budget holidays, since a cheaper room would attract a smaller charge. Local leaders would also decide how any revenue raised is spent.
What the England tourist tax powers would mean in practice
A government source said it will be ‘up to local leaders and local voters’ to decide what is right for their area. Under the proposals, mayors and leaders of Foundation Strategic Authorities (regions without a mayor) would need to set out by March 2028 how they intend to spend the new income. South Yorkshire mayor Oliver Coppard told BBC Radio Sheffield that Labour mayors would consult industry leaders before bringing in the levy, and suggested it could fund street cleaning and night buses.
Mayor of London Sir Sadiq Khan, who is attending Thursday’s meeting, told the Standard he believes action ‘needs to happen sooner rather than later’. It is understood he supports a maximum 5% levy. However, Paul Swaddle, leader of Westminster City Council, warned ‘there will be precisely zero benefit to Westminster residents and businesses’ if Sir Sadiq does not share some of the cash raised with councils.
In a development reported by ITV News, Labour’s ten regional mayors wrote to the Chancellor and the Communities Secretary on Thursday evening to say the tax will not exceed 5%. The letter represents a collective commitment from the mayors that goes beyond the government’s own stated position, which has not included any formal cap in the proposals.
Industry warns of job losses and higher costs for families
Leading trade body UKHospitality has been among the most vocal opponents of the plans, warning they are ‘not going to be painless’. Its chief executive Allen Simpson claimed the levy would add about £100 to £120 on average to the cost of a family holiday in England. He expressed concern that, because there is in theory no upper limit, mayors facing financial pressure would set rates high.
‘We know, don’t we, that local government is struggling for funds, it was hit very hard by austerity,’ Simpson told BBC Radio 4’s Today programme. ‘If you only devolve one tax raising power, of course local mayors are going to pull that lever until it snaps.’ He also warned that holiday parks may not be able to open in the shoulder seasons between peak and low season, and that holidaymakers would simply ‘have that little bit less money in their pocket.’
UKHospitality said ‘jobs are now at risk’, a warning echoed by John Chappell, who runs five caravan parks in Skegness, Lincolnshire. He told BBC Your Voice that many English tourist resorts already attract visitors on tight budgets, and said an extra cost would ‘kill the industry off’. ‘Tourists are the saviours of our resorts, not the demons,’ he added.
Conservative shadow housing secretary David Simmonds pointed to the existing tax burden on accommodation, saying: ‘VAT is already charged at 20% on hotels (much higher than in other countries) and now they’ll pay VAT on this tourism tax too: a Labour double whammy.’ Reform UK leader Nigel Farage said his party’s two mayors, in Greater Lincolnshire and Hull and East Yorkshire, ‘won’t touch’ the levy, which he described as a ‘holiday tax’.
Background: consultations, voluntary schemes and European comparisons
The Overnight Visitor Levy was outlined in the King’s Speech in May and has not yet been brought forward in Parliament. According to GOV.UK, a formal consultation on the levy launched on 26 November 2025 and closed on 18 February 2026, giving businesses and local authorities an opportunity to shape the policy before Thursday’s announcement.
Two English cities already run their own voluntary versions. Manchester operates a £1 per room, per night City Visitor Charge, introduced when Prime Minister Andy Burnham was mayor of the region. Liverpool charges £2 per night. Both are business-led schemes in which hotels pool the money raised to support local tourism. Regional mayors do not currently hold the power to impose such fees themselves, which is what Thursday’s announcement is designed to change. Burnham is framing the policy as part of his wider devolution agenda.
Overnight visitor levies are well established elsewhere. Edinburgh charges 5% for overnight stays in hotels, bed and breakfasts and self-catering accommodation, capped at five nights. In Wales, a capped levy of £1.30 per person per night is set to be introduced in April next year, with local authorities deciding whether to adopt it. Cities including New York, Amsterdam and Rome apply similar charges to fund local services, though several European destinations cap the rate.
The government’s announcement of the formal England tourist tax powers follows the mayors’ letter pledging a 5% ceiling, leaving the question of whether that self-imposed ceiling will hold once local budgets come under pressure, something UKHospitality’s Allen Simpson is openly sceptical about.
