Mayors in England could gain the power to apply a nightly charge to hotel and short-let stays, creating a new revenue stream they can choose to spend on local transport and public services. Ministers have set out plans that would give local leaders discretion over whether to introduce the levy and how to allocate the proceeds, a change that could yield hundreds of millions of pounds for cities and combined authorities that opt in.
The proposal was first drawn up by Keir Starmer’s government in November and appeared in the king’s speech in May, although no bill reached parliament before Starmer left office. Civil servants expect the charge to be calculated as a percentage of the accommodation bill rather than as a flat fee, a design decision intended to shield lower-cost holidays from the heaviest burden and place a larger share on pricier stays.
Housing secretary Angela Rayner is due to meet mayors to set out the details and the timetable for implementation, and ministers say the next step is a series of meetings to agree a charging and spending framework. No 10 has previously signalled that local leaders would be able to set out plans for how revenues will be invested by March 2028, after which individual areas would decide whether to adopt a levy.
The government points to existing UK and European examples. Greater Manchester’s mayor, Andy Burnham, launched a city visitor charge of £1 per room per night in April 2023. Edinburgh introduced a 5% visitor tax in July, after the Scottish parliament granted councils the power to set levies, and Welsh councils will be able to charge £1.30 per person per night from April 2027.
The hospitality sector has warned of economic pain if new local taxes push up the cost of breaks. Allen Simpson, chief executive of UKHospitality, told the Today programme, "What we’re talking about here is an open-ended power for mayors to set tourism taxes at any level they want." He added, "It will be the case that you’ll have holiday parks which can’t open in the shoulder seasons and of course people who go on holiday will just have that little bit less money in their pocket." UKHospitality also warned a 5% charge would be among the highest in Europe and urged mayors to consider alternatives such as a "holiday bonus" for residents.
Ministers say they do not expect levies to become excessively costly, but the proposals create a new local taxation tool whose effects will depend on the rates and scope chosen by individual mayors. The immediate business is to agree the framework for charging and spending; after that, local leaders will decide whether to press ahead and how the cash will be used in their areas.
