Labour metro mayors across 10 English city regions have pledged to voluntarily cap an upcoming uncapped overnight visitor levy at 5%, responding to hospitality industry warnings that high tourist taxes could damage regional competitiveness and risk jobs.
England’s regional leaders are preparing for significant changes under new devolution plans that will allow them to implement an accommodation levy on overnight guests. Housing, Communities and Local Government Secretary Angela Rayner met with mayors at No 10 North to outline the measures, which will charge visitors a percentage of the cost for hotels, bed and breakfasts, and other lodgings rather than a flat fee. The government argues that tying the charge to room rates will protect budget holidays by ensuring low-cost stays pay the lowest rates.
Angela Rayner and John Healey
While the government’s initial framework envisioned an uncapped levy, regional leaders moved swiftly to establish a collective boundary. In a joint letter addressed to Chancellor John Healey and Communities Secretary Angela Rayner, Labour metro mayors from 10 city regions stated that a 5% cap represents a reasonable ceiling on the tax.
The commitment came from Labour leaders representing London, Greater Manchester, Liverpool City Region, West Midlands, North East, West of England, West Yorkshire, South Yorkshire, East Midlands, and York and North Yorkshire. According to the correspondence, the proposed ceiling achieves a balance between preventing excessive local levies and allowing necessary regional variation.
The signatories emphasized that any future deployment of the tax in their respective regions would remain subject to local consultation. Local authorities and foundation strategic authorities without a mayor must clarify their revenue reinvestment plans by early 2028. While leaders can offer exemptions for accommodations like campsites, they are barred from exempting entire localities within their boundaries to prevent confusion for travelers and businesses.
The policy has met sharp pushback from the trade sector. UK Hospitality wrote to the prime minister to advocate for a holiday bonus instead, pointing out that households continue to grapple with cost-of-living pressures.
Photo: itv.com
Allen Simpson, chief executive of UK Hospitality, argued that similar regional tourist taxes—such as the one introduced in Edinburgh in July—are already having damaging effects on the trade. Mr Simpson warned that holiday parks might struggle to open during shoulder seasons, putting local employment at risk.
Opposition to the levy extends beyond hospitality trade groups. Political opposition is anticipated from the two Conservative and two Reform UK regional mayors, whose national parties have criticized the framework.
Visit Britain
Defending the policy, Angela Rayner noted the sheer volume of travelers visiting the UK. Visit Britain data shows that inbound visits reached 42.6m in 2024, with visitors generating £32.5bn in spending across 293 million nights.
Photo: bbc.co.uk
Rayner argued that giving local leaders the option to collect a percentage-based levy brings England into closer alignment with European practices while securing funds for necessary infrastructure.
“We’ve got 42 million visitors that visit the our country and take advantage of the tourism. But with that, local areas are saying what we need to do is be in line with other European countries, allow them to have this percentage rate, which means that it protects the family holidays and the budget holidays. But allows them that investment in transport and infrastructure.”
England is moving towards giving mayors powers to introduce a tourist tax on hotels & accommodation
Angela Rayner, Housing, Communities and Local Government Secretary
Research from the Organisation for Economic Co-operation and Development indicates that national taxes collected at a regional level in the UK sit far below the European Union average, ranking as the lowest among G7 nations.
The government plans to introduce a bill to Parliament in due course to formally establish the levy mechanism for both domestic and international visitors.
As Parliament moves toward enabling the tax by the end of its term, the central tension between regional infrastructure funding and industry competitiveness remains high. Whether voluntary caps at 5% will successfully mollify a struggling hospitality sector or if local authorities will face intense pushback during upcoming consultations depends on how the legislation is drafted.
