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Local mayors will be given the power to impose a ‘modest charge’ on visitors, the Ministry of Housing, Communities and Local Government said
Millie CookePolitical CorrespondentTuesday 25 November 2025 15:28 GMTComments
open image in galleryHousing secretary Steve Reed said the measures would put more money into local priorities (PA)
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Local mayors will be allowed to impose a “tourist tax” on overnight stays, the government has announced as part of an attempt to put more money into England’s cities and regions.
Mayors will be given the power to levy a “modest” charge on visitors staying in hotels, bed and breakfasts, guest houses and holiday lets.
Officials said the measure would bring English cities into line with other tourist destinations around the world, including New York, Paris and Milan, which already charge a similar levy.
It comes just a day before Rachel Reeves unveils her long-awaited Budget in the Commons on Wednesday, where she is expected to set out a swathe of tax rises to plug a multi-billion pound gap in the public finances.
open image in galleryHousing secretary Steve Reed said the measures would put more money into local priorities (PA)London Mayor Sadiq Khan, who has been a vocal proponent of the measure alongside Greater Manchester’s Andy Burnham, welcomed the announcement, saying it is “great news for London”.
He added: “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.
“As part of developing our plans for the levy, we will work closely with the hospitality and tourism sectors to ensure it delivers the maximum benefits for London and our brilliant businesses.”
Meanwhile, Mr Burnham said: “I’m proud that nearly two million people from all over the world choose to visit Greater Manchester every year. The money they spend contributes about £9bn annually to our economy, supporting over 100,000 jobs.
“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.”
A research report from the Greater London Authority in 2017 estimated that a 5 per cent levy on accommodation costs could raise £239m per year in the capital.
Announcing the measures ahead of the Budget, local government secretary Steve Reed said: “Tourists travel from near and far to visit England’s brilliant cities and regions.
open image in galleryMayor of London Sadiq Khan welcomed the announcement (PA)“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.”
However, there are fears that such a levy could negatively impact the hospitality industry, as British tourists could be deterred from taking domestic city breaks.
Earlier this year, UK Hospitality warned against imposing a tourist tax, saying such a levy would impose unsustainable costs and “make us less attractive to visitors”.
Kate Nicholls, the group’s chief executive, said: “The idea that a tourist tax would fix the public finances is completely misguided, and would only serve to inflict damage on the UK’s tourism and hospitality sectors.
“The UK already ranks incredibly poorly when it comes to our tourism competitiveness, due to our high rate of VAT.
“This is in comparison to our European competitors, many of which have VAT set at around half our 20 per cent rate, and a tourist tax will only make us less attractive to visitors.”
She added: “The potential estimated cost of a tourist tax, if inflicted on hospitality businesses, would push the additional costs they’re facing north of £4bn. That’s simply unsustainable.”
But the Ministry of Housing, Communities and Local Government said research showed that “reasonable” fees had a “minimal” impact on visitor numbers.
The money raised is intended to be invested in transport, infrastructure and the visitor economy to potentially attract more visitors.
England is currently the only G7 country where local authorities are prevented from implementing tourist taxes.
The plans will be subject to a consultation running until 18 February, which will consider issues including whether there should be a cap on the size of the levy.
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