English mayors will soon gain the legal power to implement a new tourist tax on overnight stays. The government states that this move will generate vital funds for local areas.
Under the new tourist tax plans, regional leaders can introduce an uncapped overnight accommodation levy. This charge will apply as a percentage of the cost for hotels and bed and breakfasts rather than a flat fee.
Hospitality leaders warn that this policy will put jobs at risk and hit families in the pocket. However, the government insists it will protect budget holidays by ensuring low-cost accommodation pays the lowest rate. Officials argue that the extra cash will help improve high streets and local transport networks.
Local Government Secretary Angela Rayner said: “This measure will give mayors the choice to raise and reinvest funding where it’s needed most.
She added: “It’ll help support the local services, public spaces and attractions that both residents and visitors rely on, with decisions taken by people who know their area best.”
How the New Overnight Accommodation Levy Works
Some regional leaders have backed the policy, while others have expressed caution or ruled it out completely. Local leaders must clarify by early 2028 how they plan to reinvest the revenue. They will also have the option to offer specific exemptions, such as for campsites.
However, mayors will not be permitted to exempt whole localities within their regions. This rule aims to prevent confusion for visitors and local businesses. The government will introduce a bill to Parliament in due course. The levy will apply to both British citizens and international visitors.
Industry Backlash and Cost Concerns
Leading trade body UKHospitality has hit back hard against the announcement. Its chief executive, Allen Simpson, claimed the levy puts jobs at risk across the country. He stated that it could add up to £120 to the cost of a typical family holiday in England.
“We know, don’t we, that local government is struggling for funds – it was hit very hard by austerity,” he 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 added: “It will be the case that you’ll have holiday parks which can’t open in the shoulder seasons [between peak and low season] and of course people who go on holiday will just have that little bit less money in their pocket.”
Conservative shadow housing secretary David Simmonds also criticised the plan. He pointed out that hotels already face a high VAT rate of 20 percent. He branded the new fee a “Labour double whammy” for travellers.
Reform UK leader Nigel Farage stated that his party mayors in Greater Lincolnshire and Hull will not touch the policy. He described the charge as a simple holiday tax.
Tourist Tax: Mixed Reactions Across Regions
The idea was first raised under former Prime Minister Sir Keir Starmer in November. Similar schemes already operate in Scotland and various European cities. Two English cities currently run voluntary schemes. Manchester uses a £1 nightly city visitor charge, while Liverpool applies a £2 fee.
Labour mayors in London, West Yorkshire, and the West Midlands have welcomed the news. Yet, several leaders plan to consult closely with businesses before taking action. Mayor of London Lord Khan reportedly supports a maximum 5 percent levy.
Meanwhile, opposition mayors remain firmly opposed to the idea. Mayor of Tees Valley Ben Houchen ruled out introducing any local fees last year.
John Chappell runs five caravan parks in Skegness. He told BBC Your Voice that many resorts already struggle with high travel costs. He believes an extra fee will damage the local economy.
“Tourists are the saviours of our resorts, not the demons and ill thought-out ideas like these show how out of touch with reality politicians are,” he added.
Similar charges are common in New York, Amsterdam, and Rome. In Scotland, Edinburgh applies a 5 percent visitor levy capped at five nights. Wales will also introduce a capped levy of £1.30 per person per night next April. As the debate continues, English resorts wait to see how local leaders will use their new powers.
