Mayors in England will be able to introduce a tourist levy, the government has announced.
The “modest charge” will apply to visitors staying overnight in hotels, bed and breakfasts, guest houses and other accommodation.
The money raised will be used to invest in transport, infrastructure and other local requirements.
Cities like New York, Paris and Milan already charge tourist taxes and a 5% levy is being introduced in Edinburgh from July 2026.
Regional leaders incluidng London mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham have called for the change. Khan said:
“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.
“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.”
Hospitality groups have criticised the move with UKHospitality calling it a “shocking reversal” after the tourism minister told the House of Commons two months ago that the government “had no plans to introduce a tourism tax”.
Kate Nicholls, chair of UKHospitality, said:
“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.
“It will effectively increase the rate of VAT to 27% for working people who want to enjoy a holiday in the UK – making it one of the highest tax rates for consumers in Europe.
“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.”
The government claims that research shows that reasonable fees have “minimal impact” on visitor numbers.
Housing, communities and local government secretary Steve Reed 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 plans for a tourist tax runs until 18 February.