Tourist tax plans for England set to be outlined

Plans to give English mayors the power to levy a tourist tax are expected to be outlined on Thursday. Under the proposals, a charge would apply to visitors staying overnight, with local authorities deciding how the revenue is reinvested. The measure – referred to as the tourist tax – was first raised by Sir Keir Starmer’s government in November and mirrors a scheme already operating in Scotland. The levy would be calculated as a percentage of accommodation costs rather than a flat fee, a approach the government says will help support holiday funding. In theory there would be no upper limit, although ministers believe mayors are unlikely to set the rate so high as to deter visitors. Further details will be provided after Housing Secretary Angela Rayner meets with mayors on Thursday. A government source said, “it will be up to local leaders and local voters” in England “to decide what is right for their area.” The Overnight Visitor Levy, which was featured in the King’s Speech in May, means a holiday in England could become more expensive if local authorities choose to adopt the tax. Sir Keir had intended to introduce legislation before being succeeded as prime minister by Andy Burnham, but the bill has not yet been brought forward. The prime minister has presented the policy as part of his broader devolution agenda, and No 10 previously stated that local leaders would be “able to set out plans for how revenues will be invested by March 2028.” Burnham, who was mayor of Manchester when the city launched the City Visitor Charge in April 2023 – a £1 per room, per night fee aimed at attracting more visitors – said regional mayors view the levy as necessary to raise income for local priorities and to stimulate economic growth. Such taxes are widespread in Europe and elsewhere; New York, Amsterdam and Rome apply overnight charges on accommodation to finance local services. In Scotland, local authorities can impose a visitor levy on overnight stays as a percentage rate. Edinburgh became the first city to introduce the tax in July, charging guests in hotels, bed‑and‑breakfasts and self‑catering accommodation an additional 5 % on top of the base booking cost, with the charge capped at five nights. Elsewhere in Scotland, Glasgow’s 5 % levy is scheduled to take effect from January 2027. In Wales, a capped levy of £1.30 per person per night is set to be introduced in April next year.