England’s regional mayors will be given the power to impose an uncapped overnight visitor levy on hotel, guest-house and holiday-let stays, the government said on September 10, as Prime Minister Andy Burnham pursues a drive to shift revenue-raising powers to the regions.
The measure, long sought by a cross-party group of mayors but opposed by the hospitality industry, would let each mayor choose whether to introduce a levy, set as a percentage of accommodation costs rather than a flat fee, and decide how to spend the proceeds locally. It marks one of the first major domestic policies of Burnham’s government, formed after he succeeded Keir Starmer as Labour leader and prime minister in July.
Devolution minister Jim McMahon said in a written statement that a visitor levy would let local leaders reinvest a proportionate contribution from visitors into their areas, calling it a major step in giving them control over locally raised revenue. Housing and communities secretary Angela Rayner said the measure would let mayors raise and reinvest funding where it was needed most.
There would be no cap on the rate, with London and other areas expected to set it at around 5%, and mayors required to consult residents and businesses before introducing a charge. The government intends to legislate before the parliamentary term ends in mid-2029, with the levy expected to take effect towards the end of the next financial year.
The hospitality industry criticised the plan. Industry group UK Hospitality said a 5% levy fully implemented by 2030 could cost the sector as much as £1.6bn, while modelling it commissioned from Oxford Economics projected 33,000 job losses and a reduction in tourism spending. The sector argues it already carries a 20% VAT burden and recent increases in business rates and employment costs.
Shadow chancellor Andrew Griffith said the government was launching a tax raid on families that would drive up holiday costs and discourage domestic tourism. The government said the majority of hospitality firms would not be directly affected, as the charge applies only to overnight accommodation and is at mayors’ discretion.
Mayors including Burnham, when he led Greater Manchester, London’s Sadiq Khan and the Liverpool City Region’s Steve Rotheram lobbied for the powers in 2025, arguing a modest levy in line with cities such as Paris and New York would fund local services and cultural infrastructure. A similar levy took effect in Edinburgh in July under separate Scottish legislation.