Labour’s regional mayors in England have pledged to cap a proposed charge on visitors’ overnight stays at 5%, after hospitality bosses warned that the levy could put jobs at risk.
Local leaders are set to receive new powers to charge an uncapped levy on overnight accommodation, calculated as a percentage of the cost of hotels, bed and breakfasts and other accommodation. The government has said the charge would apply to visitors from Britain and abroad.
Mayors describe 5% as a ‘reasonable ceiling’
Labour mayors in 10 English city regions said they would voluntarily limit the charge to 5% if they introduced it, saying they had listened to concerns about costs.
In a letter to Chancellor John Healey and Local Government Secretary Angela Rayner, the metro mayors described 5% as a “reasonable ceiling”. They said the limit would prevent local levies from becoming excessive or varying significantly between regions, while allowing appropriate local variation.
The mayors also said any future levies in their areas would be subject to local consultation and could support meaningful investment in local areas.
The letter was signed by the Labour mayors of London, Greater Manchester, Liverpool City Region, the West Midlands, the North East, the West of England, West Yorkshire, South Yorkshire, the East Midlands, and York and North Yorkshire.
Opposition to the proposed levy
Reform UK’s two regional mayors and the two Conservative regional mayors are likely to oppose any levy, following criticism of the policy from their national parties.
Reform UK leader Nigel Farage said the party’s mayors in Greater Lincolnshire and Hull and East Yorkshire “won’t touch” the levy, which he described as a “holiday tax”.
UKHospitality said the levy meant jobs were at risk. Its chief executive, Allen Simpson, claimed it would add about £100 to £120 on average to the cost of a family holiday in England, amid concerns that mayors could use the theoretical absence of an upper limit.
Conservative shadow housing secretary David Simmonds said the levy would create what he called a Labour “double whammy”, arguing that hotels already pay 20% VAT and would also pay VAT on the tourism tax.
How the levy would work
The government has pledged to protect budget holidays by ensuring that low-cost accommodation always pays the lowest levy. It has also said the additional revenue could be invested in high streets and local transport.
Mayors would be allowed to offer exemptions, including possible exemptions for campsites, but would not be allowed to exempt whole localities within their regions. Local leaders, including heads of Foundation Strategic Authorities without a mayor, will need to clarify by early 2028 how levy revenue should be reinvested.
The government said it would introduce a bill to Parliament “in due course” to establish the levy.
Existing visitor charges
Manchester and Liverpool already operate voluntary overnight visitor charges. Manchester charges £1 per room per night, while Liverpool charges £2 per night. Hotels choose to pool the money for local tourism through those business-led schemes.
In Edinburgh, the visitor levy is 5% for overnight stays in hotels, bed and breakfasts and self-catering facilities, with the charge capped at five nights.
Wales is set to introduce a capped levy of £1.30 per person per night in April next year, although local authorities will decide whether to implement it.
Source: BBC News
