English mayors to get the power to charge a tourist tax — with no cap on the rate

The government has confirmed that mayors of England's combined authorities will be given the power to charge a tourist tax. Housing and communities secretary Angela Rayner announced it in Manchester on 10 September. Each mayor will set the rate, and there will be no upper limit.

What has actually been decided

The levy is designed as a percentage of the accommodation bill rather than a flat nightly fee. Government sources talk about "a few per cent". In practice it is a line added to the bill at a hotel, guest house or short-term let: the guest pays it, the host collects and remits it.

The detail that started the argument is the absence of a cap. Nothing in the plan sets a ceiling above which a mayor may not go. Ministers regard that as the point of devolution — local government knows how many visitors a city takes and what serving them costs. Critics regard it as an open door.

How the money is spent is also a local decision; no national restrictions have been set on the proceeds.

What it could cost a visitor

The Mayor of London has floated 3%. At that rate the capital would raise something like £350 million a year. For a guest it looks like this: a £150-a-night room costs about £4.50 more, and a week in London for two comes to roughly £30 extra.

One detail is easy to miss: VAT is charged on the full cost of the stay, the levy included. So twenty per cent of VAT sits on top of the tourist tax itself.

Where this already exists

England is not first. Greater Manchester has run a City Visitor Charge since April 2023 — a pound a night per room in city-centre hotels. Scotland and Wales have brought in schemes of their own. Across continental Europe a city visitor charge is an ordinary line on the bill, from Prague and Berlin to Rome and Barcelona.

What is new is the legal machinery. English mayors have had no statutory mechanism until now, and Manchester worked through an agreement among hoteliers themselves. The mechanism is coming — and with it an obligation to pay.

Who objects

The sharpest response came from the trade body UKHospitality. Its chief executive, Allen Simpson, called the new powers open-ended: mayors would be able to set tourism taxes at any level they want.

Jon Hendry Pickup, chief executive of the family resort operator Butlin's, warned that an uncapped power risks making family holidays less affordable — and British domestic tourism rests precisely on families counting every pound.

The business travel bodies — the Business Travel Association, the Global Business Travel Association and the Institute of Travel Management — are asking for work trips to be exempt: someone sent to a city for a job is not a tourist and rarely chooses where to sleep.

Not every mayor wants the power. The Mayor of Tees Valley dismissed the idea outright; his region competes for every visitor it gets and has no use for another line on the bill. That is the logic of devolution — nobody is obliged to introduce the charge.

What it means here

For people living in Britain this is less abstract than it sounds. Three situations where the levy reaches you directly:

Relatives visiting. If you put guests in a hotel or rent them a flat by the night, the tax lands on that bill. A week in London for two adds around thirty pounds at a 3% rate.

Trips around the country. A weekend in Edinburgh, Cardiff, Manchester or Brighton: Scotland and Wales already charge, and English cities will follow as mayors decide. The trip budget now has an extra line in it.

Letting a room short-term. If you run an Airbnb or let a room by the night, you become the collector: charge it, show it on the bill, pass it on. The administrative detail has not been published, but it is safe to assume there will be reporting.

No start date has been given. The legislation has to pass Parliament first, and then each mayor takes their own decision. We will follow it and report the actual rates and dates city by city.