Visitor Levy Bill would let English mayors and strategic authorities charge uncapped overnight levy

What the bill does

Guests at hotels, B&Bs and holiday lets in England could pay a percentage surcharge on the bill from early 2028 under the Visitor Levy Bill. Accommodation providers will be responsible for accounting for and paying the levy, the government said. UKHospitality says the money is not legally ring-fenced for tourism.

Plans for the levy were first raised under Starmer's government, and the 2025 Budget confirmed that regional mayors in England would be given the power. Prime minister Andy Burnham said in September he would grant mayors the right to add fees on overnight guests.

The levy will be charged as a percentage of the cost of accommodation, not a flat fee. Ministers say that protects lower-cost stays. It applies to the first 28 consecutive days of a stay.

How a levy would start

Before a levy starts, the authority must publish a draft plan. It must set out the proposed rate, threshold, exemptions and how the money will be spent. The plan must also include an impact assessment for the local economy, businesses and visitors. The authority must then consult local people and businesses before a final decision. Any authority that goes ahead must publish an annual report. The report must cover what it raises and its future spending plans.

National exemptions cover student accommodation, care homes, children's homes, school boarding houses, temporary accommodation, shelters and refuges. Occasional hosts pay only if they earn above a set amount. The power could reach 20 strategic authorities in England, 14 of which have a directly elected mayor. In non-mayoral foundation strategic authorities, a levy would need unanimous support.

Hospitality's bill

UKHospitality chief executive Allen Simpson called the legislation "genuinely shocking".

Oxford Economics modelled a 5% levy for UKHospitality. It estimated the levy would cost 33,000 jobs, increase taxes paid by holidaymakers by £1.6bn and cut Treasury receipts by almost £700m. By 2030 it projected a £2.2bn reduction in GDP, a £1.8bn cut in tourism spending, a £101m loss in direct investment by hospitality and tourism businesses and 11.9 million fewer nights spent in accommodation.

UKHospitality also argues the UK's 20% VAT rate is already the third highest in Europe. A levy would stack on top of an existing bill. Butlin's chief executive Jon Hendry Pickup said the absence of a binding national cap risks unfair differences for working families taking holidays in the UK.

The government says the levy brings England in line with Germany, Italy, the United States, the Netherlands and Canada. Housing secretary Angela Rayner said: "Every pound raised through these levies will stay in the local area. Whether that's better transport, thriving high streets, or more attractions that keep visitors coming back."

The polling behind the fight

Stack Datra Strategy polled 10,005 adults across Great Britain for UKHospitality, in partnership with Butlin's, Haven and Hilton. It found 56% opposed the proposed holiday tax and 24% supported it. One in five said any increase in the cost of a break would stop them booking a holiday in England.

MRP modelling associated with the poll found a majority opposed in 574 of 632 Great Britain constituencies. Voters were nearly 10 times more likely to punish an MP who backs the tax than to support that MP. UKHospitality said this could affect the government's majority in 200 seats.

Existing levies and what happens next

Manchester introduced a £1 per room per night fee in April 2023. It raised around £2.8m in its first year. Edinburgh introduced a 5% overnight levy this summer for the first five nights of a stay.

York and North Yorkshire mayor David Skaith has said a levy could raise up to £26m. That compares with Manchester's £2.8m first-year total. He said it would be a "total gamechanger" for the county. The city may not spend all the money raised in York. Skaith has said it would go into a wider pot for the region.

The bill must still pass Parliament before any authority can introduce a levy.