English mayors granted powers to introduce tourist tax by March 2028
English mayors have been granted new powers to introduce an overnight tourist tax across England, with local leaders expected to set out their spending plans by March 2028.
English mayors have been granted new powers to introduce an overnight tourist tax across England, with local leaders expected to set out their spending plans by March 2028. According to government documents published by The Guardian, the move forms the first step in a wider fiscal devolution programme aimed at shifting financial responsibility out of Westminster.
The Ministry of Housing, Communities and Local Government published the formal response following a consultation. In the document's foreword, local government minister Jim McMahon and Treasury minister James Murray stated that the overnight visitor levy (OVL) shifts power back to local leaders. They cited OECD research suggesting that enhanced fiscal decentralisation correlates with higher economic growth, noting that only 6% of national taxes are collected sub-nationally in the UK — the lowest in the G7.
Media additions
As reported by Courthousenews, every mayoral authority in England will receive the power to implement the levy. The charge will not be mandatory, and mayors must consult local residents and businesses while giving advance notice to accommodation providers. Hotels, bed-and-breakfasts, and short-term rentals such as Airbnb will collect the fee. National exemptions apply to charities, refuges, and registered Romani and traveller camps, while mayors may add limited local exemptions such as campsites.
Housing Secretary Angela Rayner, speaking after a meeting of regional mayors at No10 North in Manchester, said the measure gives local leaders the choice to reinvest funding where it is needed most. Prime Minister Andy Burnham — who previously introduced Manchester's City Visitor Charge as regional mayor, has championed the devolution agenda. Supporters such as Centre for Cities chief executive Andrew Carter called the levy a milestone for local autonomy, and Friends of the Lake District backed the plan to protect regional landscapes.
However, the policy has sparked sharp division. Unlike cities in Europe such as Paris, Rome, and Berlin where tourist taxes are capped, the English framework features no national upper limit (Travellingforbusiness). Allen Simpson, chief executive of UKHospitality, warned that an open-ended power could prompt mayors to pull the funding lever until it snaps, citing modelling that suggests a 5% levy could cost 33,000 jobs and add up to £120 to a family holiday (The Independent). Hilton UK & Ireland executive Stephen Cassidy added that the levy threatens a sector already grappling with high business rates and energy costs (Daily Mail).
London Mayor Sadiq Khan welcomed the announcement (BBC), noting that a modest levy would keep the capital globally competitive. While Whitehall left the percentage uncapped, Khan pledged that London's levy would not exceed 5%. Central London Forward analysis indicated a 3% levy in the capital could raise £350 million, while newer estimates suggest a 5% rate could generate up to £580 million. Conversely, Conservative Tees Valley Mayor Lord Houchen dismissed the plan outright, and opposition leader Kemi Badenoch condemned the tax as a job-reducer.
| Region / Scheme | Proposed Rate | Estimated Annual Revenue | Stated Position / Key Concern |
|---|---|---|---|
| London (Sadiq Khan) | Capped at 5% locally | £350m (at 3%) to £580m (at 5%) | Welcomed as essential for global competitiveness and local investment. |
| National Hospitality Sector (UKHospitality) | Uncapped nationally | Potential industry cost of £1.6bn | Warned of a potential jobs bloodbath and increased holiday costs. |
Business travel associations, including the Business Travel Association and the Institute of Travel Management, have urged that work trips be exempt from the levy to protect corporate budgets from a patchwork of regional charges. Meanwhile, local authorities like Westminster Council have argued that boroughs should retain at least half of the funds raised locally to manage visitor upkeep (BBC).
Ministers maintain that local leaders will act responsibly to avoid pricing themselves out of the tourism market.
What to Watch Next
- Legislation to establish the legal framework for the overnight visitor levy will be introduced in Parliament during the current session (Courthousenews).
- Mayors and strategic authorities will conduct local consultations with residents, businesses, and accommodation providers.
- Local leaders are expected to formally set out their spending and implementation plans by March 2028 (The Guardian).
