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UK: England’s mayors will be able to invest in transport, infrastructure, and the visitor economy through a new levy on overnight stays.
Any new levy would apply to visitors at accommodation providers including hotels, holiday lets, bed and breakfasts, and guesthouses.
It would be up to mayors and other local leaders to introduce a “modest charge if it’s right for their area”.
Steve Reed, secretary of state for housing, communities and local government, said: “Tourists travel from near and far to visit England’s brilliant cities and regions. We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.”
A consultation on the new measure will run for 12 weeks and close on 18 February 2026.
The announcement comes ahead of today’s Budget.
Industry reactions:
Sadiq Khan, mayor of London
“Giving mayors the powers to raise a tourist levy is great news for London. The extra funding will directly support London’s economy, and help cement our reputation as a global tourism and business destination. It also shows what can be done when ministers work closely with mayors to devolve more powers to cities and regions.”
Helen Godwin, mayor of the west of England
“These new powers are a real vote of confidence in our region taking more control of our future. Proceeds from an overnight visitor levy, that people from across the West are used to paying on holiday ourselves, have the potential to support and enhance the sector’s businesses and workers – including with better transport options.”
Andy Burnham, mayor of Greater Manchester
“Greater Manchester already has a thriving visitor economy, and a visitor levy will help us sustain good growth over the next decade. The levy will allow us to invest in the infrastructure these visitors need, like keeping our streets clean and enhancing our public transport system through later running buses and trams, making sure every experience is a positive and memorable one.”
Joss Croft, CEO, UKinbound
“The announcement that regional mayors could introduce a levy on overnight stays will cause serious concern across England’s visitor economy. International visitors to the UK already face a stack of charges including visa or ETA fees, some of the highest Air Passenger Duty rates in the world, and 20 per cent VAT on hospitality, charges which weaken the UK’s appeal as a destination to visit.
“We urge the UK government to work closely with industry to avoid measures that could make the UK less competitive, less attractive to international visitors, and put jobs and regional growth at risk.”
Kay Buxton, chief executive, Marble Arch London BID
“We believe that the overnight levy must be proportionate, and not pose a threat to London’s visitor economy. The funding raised should be reinvested locally to improve conditions for visitors. Business input to the design and roll-out of a scheme for London will be vital and Marble Arch BID will work with our colleagues in neighbouring Westminster BIDs to represent our 17 hotel members, who between them provide over 3,300 hotel rooms, to influence the spending priorities of the Mayor of London and make sure the levy is invested in projects and services that benefit the tourism sector.”
Ben Spier, head of policy and regulation, Sykes Holiday Cottages
“The introduction of a tourism tax in the UK represents a further blow for our country’s hospitality and staycation industry which has already been squeezed by tax rises and regulatory changes in recent years.
“This levy won’t just be felt by families already managing rising household costs, it threatens to deter people from choosing holidays in the UK which would be a serious blow for the many communities that depend heavily on spending from the overnight visitors who will face this levy.
“The UK’s tourism and hospitality businesses are already among the most heavily taxed in Europe, facing everything from steep business rates and corporation tax to some of the highest VAT levels in the sector. Adding a new tourism levy risks putting more pressure, and more admin, on the many small businesses – from holiday let owners to local pubs, shops and attractions – who rely on a thriving visitor economy.”
Kate Nicholls, chair, UKHospitality
“This is a shocking U-turn that will only make life more expensive for working people. It could cost the public up to £518 million in additional tax when they travel in the UK and having knock-on impacts for the wider hospitality sector. Make no mistake – this cost will be passed directly onto consumers, drive inflation and undermine the government’s aim to reduce the cost of living.”
Highlights:
- England’s mayors are being given new powers to introduce an overnight accommodation levy to support transport, infrastructure, and the visitor economy.
- The levy could apply to hotels, serviced apartments, holiday lets, B&Bs, and guesthouses, with each region deciding if and how to implement it.
- A 12-week consultation runs until 18 February 2026, with the announcement made ahead of the UK Budget.
- Mayors in London, Manchester, and the West of England have welcomed the measure as a way to reinvest in tourism and local services.
- Industry groups warn the levy could increase travel costs, reduce UK competitiveness, and put pressure on hospitality businesses already facing high taxation.
