Holidaymakers in England are set to face a new overnight levy on hotel and short-term rental stays as the government prepares to grant regional mayors the authority to impose a “tourist tax.” The proposed measure, announced in early September 2026, would allow mayors across much of England to set a fee, potentially as a percentage of accommodation costs, with no prescribed upper limit. However, Labour’s ten regional metro mayors have publicly committed to capping charges at 5% to keep the levy “modest” and to avoid large disparities between areas.
The government argues the levy aims to provide local leaders with a vital revenue stream to reinvest in regional services and tourism infrastructure amid ongoing funding pressures. Angela Rayner, the Secretary of State for Local Government, emphasized that the move would enable communities to benefit directly from visitor spending by funding local services, attractions, and public spaces. This follows similar schemes already introduced by devolved administrations in Scotland and Wales, where capped tourist taxes are used to support local projects.
Despite government assurances that most hospitality businesses would not be “directly affected” by the new tax—since it applies only to overnight stays and rests on mayoral discretion—industry groups have expressed significant opposition. UKHospitality, the sector’s trade body, warned that a 5% levy across England could trigger up to 33,000 job losses and deal a £2 billion blow to the economy, disproportionately impacting tourism-dependent areas such as the Lake District and Yorkshire Dales. Allen Simpson, chief executive of UKHospitality, described the plans as potentially “hugely damaging,” citing early signs from Edinburgh’s 5% tourist tax introduced in July 2026, which he said was already harming the city’s hospitality sector.
Smaller tourism businesses and hotel operators, such as the owners of the Premier Inn chain and regional hotel groups, echoed these concerns, highlighting the financial strain on businesses struggling with inflation, rising employment costs, and post-pandemic recovery. Critics argue the open-ended nature of the levy could lead to excessive charges in some areas and reduce disposable income for holidaymakers, potentially deterring tourism during shoulder seasons.
Conversely, some regional leaders and local business coalitions have welcomed the tax as a way to generate substantial funds for cultural and infrastructural investments. Manchester and Liverpool, where local overnight levies have been introduced voluntarily through business improvement districts since 2023, have reportedly raised millions of pounds, which have been allocated to cultural events and tourism promotion without a significant decline in visitor numbers. Research, including a 2024 study from Bangor University, found no clear evidence that modest tourist taxes discourage visitors across Europe. Cities such as Barcelona, Venice, and Amsterdam have maintained steady or growing tourism despite their levies.
The policy forms part of a broader devolution agenda championed by Mayor Andy Burnham and other regional leaders, aiming to shift fiscal powers from central government to local authorities. Legislation to formalize the levy powers is expected to be introduced in Parliament within the coming months, with mayors required to submit detailed plans on their intended use of the revenue by March 2028.
The introduction of the tourist tax marks a significant shift in the funding model for English tourism, balancing potential benefits from increased local investment against concerns over industry viability and regional economic impact. Some areas, particularly along the east coast, are already poised to reject the tax, as regional mayors from Reform UK and the Conservative Party have expressed opposition to introducing such levies.
As the policy moves forward, stakeholders across government, local authorities, and the hospitality sector continue to debate its potential consequences for England’s tourism landscape and broader economic recovery.