Major changes announced in the UK government's budget have paved the way for cities across England to introduce a tourist tax on overnight accommodation.
The new policy grants English mayors the authority to levy charges on all forms of short-term lodging, a move that aligns the country with numerous popular European destinations.
What the New Tourist Tax Powers Mean
Previously, some local authorities like Manchester implemented charges on hotel stays through local business fees. This system, however, left a significant gap, allowing platforms like Airbnb to often escape taxation.
The government's updated rules are designed to close this loophole, enabling cities to uniformly impose fees on all types of short-term accommodations.
Housing Secretary Steve Reed stated that this measure will allow mayors to "put more money into local priorities, so they can keep driving growth and investing in these communities for years to come."
Mixed Reactions from Local Leaders
The political response to the new powers has been divided. London Mayor Sadiq Khan welcomed the change, calling it "great news for London" that would "directly support London's economy."
Similarly, Greater Manchester's Andy Burnham endorsed the tax, believing it will "help us sustain good growth over the next decade."
In contrast, Tees Valley's Mayor Lord Houchen delivered a firm rebuttal: "There will be no tourist tax in Teesside, Darlington and Hartlepool for as long as I'm mayor. Thanks, but no thanks."
The Potential Financial Impact
An analysis of the potential revenue reveals significant sums could be raised for local councils. According to data from the Office for National Statistics, international visitors to England spent a combined nearly 250 million nights in the country last year.
Based on these figures, a flat-rate £1-per-night tax applied across England could generate approximately £250 million from overseas visitors alone.
The revenue potential increases substantially when domestic tourism is included. A 2017 study focusing on the Greater London area estimated that a £1-per-night tourist tax could raise up to £91 million. More recent ONS data from 2024 suggests the figure from overseas visitors could now exceed £116 million for the capital.
These projections, however, assume that visitor numbers would remain constant after the tax's introduction—a point of contention for critics.
Criticism and Broader Context
Representatives from the hospitality industry have voiced concerns, arguing that the new levy could deter international visitors, contribute to inflation, and put off British families from taking holidays within the UK.
Despite these warnings, some academic research, including a study on Manchester's hotel charge conducted earlier this year, has indicated that tourist taxes have little measurable impact on visitor numbers.
The budget announcement applies specifically to England. Both Scotland and Wales passed their own legislation earlier this year. Edinburgh has confirmed a 5% levy on stays starting in July 2026, while Welsh authorities will be able to implement a charge of up to £1.30 per night from April 2027.
