England's mayors would get power to tax overnight stays under new Visitor Levy Bill

England's regional mayors moved a step closer to taxing overnight stays on Wednesday, November 4, when the government introduced the Visitor Levy (England) Bill in the House of Commons. The bill would let mayors and other "strategic authorities" charge a levy set as a percentage of the price of a hotel room, bed and breakfast, holiday let or similar paid stay. The money would stay in the area that raises it. Hospitality trade bodies, the Conservatives and Reform UK oppose the plan, and the fight now moves to the bill's passage through Parliament.

The government's announcement, issued by the Ministry of Housing, Communities and Local Government and Housing Secretary Angela Rayner, calls the bill "the most significant step in making fiscal devolution a reality." Ten Labour mayors have pledged that any levy in their areas would be no higher than 5%. The bill itself sets no ceiling. That gap between a political promise and the text of the law is the main point of dispute, alongside who pays and where the money goes.

What the bill does

The Tourism Alliance, an industry body, identifies the measure as Bill 177. According to the government's summary, the main features are:

• Who can charge it. Mayoral combined authorities and "Foundation Strategic Authorities," the non-mayoral groupings of councils, would each have the power. In a Foundation Strategic Authority, a levy could go ahead only with unanimous support from its members.
• How it is charged. The levy must be a percentage of the cost of the accommodation, not a flat fee per night. The government says this protects cheaper family breaks, because a lower room price means a lower charge.
• How long it applies. Only the first 28 consecutive nights of a stay would be taxed, because longer stays count as long-term accommodation.
• Exemptions. Student accommodation, care homes, children's homes and school boarding houses are exempt nationally. Temporary accommodation, shelters and refuges would not be charged. Local leaders could add limited local exemptions, such as camping pitches.
• Small hosts. People who occasionally rent out a spare room would pay only if they earn above a threshold, which local leaders could adjust.
• Who pays it to the authority. Hotels and other providers would account for and pay the levy, using what the government calls "standard tax powers, in line with those that apply to national self-assessed taxes."

Before introducing a levy, an authority would have to publish a draft plan and an impact assessment covering the rate, threshold, exemptions and spending plans. It would then consult residents and businesses, consider their views, and publish the responses and final documents. Authorities that run a levy would publish an annual report on what they raise and spend.

The government's consultation response says that, subject to Parliament, it expects local leaders to set out plans for how revenue will be invested by March 2028. A levy is therefore unlikely to appear on any English hotel bill for at least a year, and probably longer.

Why the government says England needs it

The government frames the levy as a matter of devolution. Its consultation response cites OECD data showing that just 6% of UK taxes are collected at the sub-national level. It calls that "far below the EU average and the lowest in the G7." It also cites an OECD working paper associating greater fiscal decentralization with higher growth. That research shows an association between decentralization and growth across countries, not proof that a visitor levy in England would raise growth.

The levy is one of several fiscal powers the government has promised mayors, alongside a local share of income tax and wider retention of business rates. Those plans are part of Prime Minister Andy Burnham's wider devolution agenda, which also featured in our report on the Glasgow nations summit. Burnham's government confirmed in September that mayors would get the power. The idea was first raised under his predecessor, Keir Starmer, according to the BBC.

"Every pound raised through these levies will stay in the local area," Rayner said in the government statement. "This is about giving mayors and local leaders the choice to invest back into what matters most to local people, while protecting lower-cost stays and making sure businesses have their say."

What the mayors say they would do with it

The government's statement carried endorsements from several Labour mayors. Bev Craig, Mayor of Greater Manchester, said the region had campaigned for the power. She pointed to the city's existing City Visitor Charge, a business-led £1 per room per night fee run through a Business Improvement District. The government says that charge raised £2.8 million in its first year after its 2023 launch and paid for more street cleaning. Craig said the money from a wider levy could help "attract more events" and pay for "long term projects like extending the tram network."

Liverpool City Region Mayor Steve Rotheram said the region's visitor economy is worth more than £6.8 billion a year and that a "modest levy on overnight stays could potentially raise up to £18m a year." David Skaith, Mayor of York and North Yorkshire, said he "will be introducing a Levy in our county." London Mayor Sadiq Khan said he "wholeheartedly" welcomed the bill. West Yorkshire Mayor Tracy Brabin said revenue could pay for "gigs, performances, art and sport," cleaner streets and night buses.

Other mayors were more cautious about whether they would use the power. South Yorkshire Mayor Oliver Coppard said: "Whether we take the decision to implement the levy or not, we now - rightly - control that decision." Cultural institutions, including the Tate, the Southbank Centre and the National Theatre, also backed the bill in the government's release.

The 5% pledge dates from September. In a letter to Chancellor John Healey and Rayner, ten Labour mayors called 5% a "reasonable ceiling," the BBC reported. The signatories cover London, Greater Manchester, Liverpool City Region, the West Midlands, the North East, the West of England, West Yorkshire, South Yorkshire, the East Midlands, and York and North Yorkshire. The legal news service Law News points out that this is a commitment by those mayors, not a statutory cap, and that the government has said it does not intend to set one.

What hospitality businesses say

The industry response on Wednesday was sharply critical. UKHospitality, the largest trade body for the sector, renamed the measure the "Holiday Tax Bill." Its chief executive, Allen Simpson, said in a statement: "Mayors will be able to introduce an uncapped holiday tax on Brits and then spend the funds on whatever they like, with no legal requirements to even use the funds to benefit hospitality."

UKHospitality cites analysis it commissioned from Oxford Economics, which estimated that a 5% levy would cost 33,000 jobs, raise tax for holidaymakers by £1.6 billion and cost the Treasury almost £700 million, assuming the impact was fully realized by 2030. These are modeled estimates for an industry client, not observed effects. The government documents reviewed for this article do not include a competing national estimate. Simpson added that the UK's 20% VAT on accommodation "is already the third highest in Europe."

Jon Hendry Pickup, chief executive of the holiday park operator Butlin's, told the trade publication The Caterer that "without a binding national cap, the Holiday Tax risks creating unfair differences for working families." He also objected to providers carrying the paperwork.

The Tourism Alliance, which represents more than 65 organizations in the visitor economy, gave a more mixed verdict. Its executive director, Eddy Leviten, said: "The Government has listened on how the levy is collected. Letting businesses use booking platforms to collect and pay, a threshold for smaller operators, and a full consultation before any rate change are all safeguards we argued for." But, he added, "There is no cap on the rate. There is no ring-fence: the money goes into the mayor's general fund, and the Bill does not mention tourism once. And in mayoral areas, local councils have no veto." The Alliance says it will seek amendments to add a cap, a ring-fence and a local veto, and to cut VAT on accommodation to 10% before any levy starts.

Some providers back the principle. Kumar Mishra, chair of the Manchester Accommodation Business Improvement District, said the city's experience "shows what can be achieved," while stressing that a levy must be "designed well" and complement existing schemes.

What the opposition parties say

The Conservatives and Reform UK both oppose the levy. When the policy was announced in September, Conservative shadow housing secretary David Simmonds said hotels would pay VAT on the levy as well: "a Labour double whammy," according to the BBC.

Reform UK has pledged to oppose the bill and repeal it if it becomes law. In a September party statement, Reform's shadow chancellor, Robert Jenrick, called it "a disaster for working people" and said Burnham was "asking mayors to do his dirty work by increasing taxes themselves." Party leader Nigel Farage said Reform's two mayors, in Greater Lincolnshire and Hull and East Yorkshire, "won't touch" the levy, the BBC reported. The BBC also reported that the two Conservative mayors were likely to oppose any levy.

A caveat applies to these reactions. The Conservative and Reform statements quoted here date from September, when the policy was announced. The searches for this article, up to about 3 p.m. Eastern Time (8 p.m. in London) on November 4, did not find a new formal statement from either party on the bill's text.

What the consultation showed

The bill follows a consultation that ran from November 26, 2025, to February 18, 2026, and received 1,223 responses. Respondents were not a representative sample of the public. Anyone could reply, and 30% of the responses (365) came from the accommodation and bookings sector, Law News reported. The answers show which design choices drew objections from engaged parties, but not what the wider public thinks.

On two central questions, the government went against the majority of respondents. Sixty percent (726) opposed charging the levy as a percentage, with the strongest opposition from accommodation providers, who cited complexity. And 58% (706) wanted a national cap on the rate, which the government declined to set.

The government's response explains its choices. A percentage rate "helps protect affordability by charging less on lower-cost accommodation," it says, and adjusts automatically for seasons and inflation. On the cap, it calls the matter "a finely balanced issue" and says it "will continue to consider the case" for one, but argues that a national ceiling could end up "operating as a default rate regardless of local market conditions." Mayors would also be barred from setting different rates by season, accommodation type or council area within their region.

UKHospitality also cites a poll of 10,005 adults in Great Britain by Stack Data Strategy, commissioned with Butlin's, Haven and Hilton. It found that 56% opposed the "proposed holiday tax" and 24% supported it. The trade body's release does not give the field dates or the exact question wording, and the poll was commissioned by businesses campaigning against the levy. The figure should be read with those limits in mind. No independent poll on the bill itself was found for this article.

How England compares with Scotland and Wales

England would be the last of Great Britain's three nations to give local government this power. The schemes differ in ways that track the arguments in the English debate.

Sources: City of Edinburgh Council, Welsh Government, UK government.

Edinburgh's levy, the first in Scotland, applies to stays from July 24, 2026, at 5% of the accommodation cost for up to five consecutive nights. The council expects it to raise £45 million to £50 million a year by 2028/29. It has set out a split for the money: 55% for city operations and infrastructure, 35% for culture, heritage and events and 10% for destination management. Providers keep 2% of what they collect to cover administration. The BBC reported mixed reactions: some praised the extra investment, while Scottish Ballet cut performances, citing the "unsustainable economics of touring in Edinburgh."

Wales chose a flat charge. Cardiff Council has introduced a levy of £1.30 per person per night for most accommodation from April 1, 2027, under rules set by the Welsh Government, which also set a lower rate for hostels and campsites.

The comparison cuts both ways. Supporters of the English bill can point to Edinburgh's 5% rate and published spending split as a working model. Critics can point to its five-night cap and its stated allocation of money as protections the English bill does not contain.

The arguments, side by side

The disagreement comes down to a few linked questions.

Who should decide? The government and Labour mayors argue that local leaders know their areas best and that England's tax system is unusually centralized. Opponents counter that devolving a single tax-raising power to cash-strapped authorities invites them to use it heavily. In September Simpson told BBC Radio 4: "If you only devolve one tax raising power, of course local mayors are going to pull that lever until it snaps." That is a prediction about future behavior. The ten Labour mayors' 5% pledge is a counter-commitment, but it does not bind future mayors.

Who bears the cost? Supporters argue that visitors use local services and should help pay for them, as they do in Amsterdam, Berlin, Vienna and New York. Opponents argue that much of the cost falls on domestic families, workers who travel for jobs and people visiting relatives, and that the UK's 20% VAT already makes stays expensive. Who ultimately pays a levy depends on how much providers pass on to guests, which the government's response says is a matter for providers.

Where does the money go? The bill lets mayors spend on a wide range of things, from transport to high streets. The Tourism Alliance and UKHospitality want the money ring-fenced for tourism. Supporters say visitors benefit from cleaner streets, transport and events, so spending need not be tied narrowly to the tourism trade.

The levy also lands in a wider budget fight. Our report on the October Budget set out the pressure on public spending that local and national leaders face. For background on the party positions, see the United Kingdom issue guide.

The bill's remaining stages in Parliament

The bill has had its formal first reading. It still needs a second reading debate, committee and report stages in the Commons, and passage through the House of Lords. The Tourism Alliance says it will lobby MPs and peers for amendments on a cap, a ring-fence and a local veto. Amendments are possible, and the government has said it is still considering the case for a cap.

Even after the bill passes, any mayor who wants a levy would first have to publish a plan and an impact assessment, consult locally and win the required agreement within their authority. Reform's two mayors have said they will not use the power, and the BBC reported that the two Conservative mayors were likely to oppose any levy. Among Labour mayors, York and North Yorkshire's Skaith has said he will introduce one, while others, such as Coppard, have said only that the decision is now theirs.

This article reflects information available as of about 3 p.m. Eastern Time on November 4.