- England metro mayors to gain powers for tourist taxes from 2028
- Overnight Visitor Levy structured as percentage of accommodation bill
- Ten Labour mayors commit to capping tax at 5pc locally
- UKHospitality warns of irreparable harm to domestic tourism
- Oxford Economics modelling suggests up to 33,000 jobs at risk
England’s regional mayors will receive powers to introduce a new Overnight Visitor Levy expected to come into effect by March 2028. England government’s plans grant local leaders the ability to charge a percentage-based tax on overnight stays including hotels, Airbnbs, bed and breakfasts and holiday lets. The government is not placing an upper limit on the tax, giving mayors fiscal freedom. However, 10 regional Labour mayors including London’s Sadiq Khan and Greater Manchester’s Andy Burnham have co-signed a letter promising to cap the tourist tax at 5pc locally.
Unlike a flat fee per night, the tax will be structured as a percentage of the total accommodation bill. Ministers argue this protects budget holidays because cheaper accommodation will inherently pay a lower amount. All revenue raised from the tax will be kept by local authorities rather than funnelled back to the Treasury. Mayors must outline their official spending plans by early 2028 with funds intended for local transport, high streets, public infrastructure and boosting the regional visitor economy. Mayors will have the power to define specific exemptions such as excluding campsites but are legally barred from exempting individual towns within their wider mayoral region.
The announcement has created a divide between local government leaders and England holiday industry. Metro mayors have campaigned for this power, pointing out that overnight visitor levies are normal in international tourism hubs like Paris, Rome and New York. Trade body EnglandHospitality has condemned the decision, warning it could cause irreparable harm to domestic tourism. Industry modelling from Oxford Economics suggests that a fully implemented 5pc levy across England could risk up to 33,000 jobs and shave approximately £2.2bn off the country’s economic output by 2030. The legislation to formalise the Overnight Visitor Levy Bill is expected to be introduced to Parliament during the 2026-27 session.
