England’s Visitor Levy Bill: 10 Mayors Back a 5% Ceiling

By Daniel Okafor

The House of Commons has formally introduced a Visitor Levy Bill that would let mayors and local leaders across England impose an uncapped percentage charge on overnight accommodation for the first 28 consecutive days of a stay.

For hotels and holiday lets, the mechanics are immediate: the levy would be calculated as a percentage of the accommodation cost, while providers would be responsible for accounting for and paying it. The bill sets no national ceiling. Although 10 mayors have committed to rates “no higher than 5%,” the wider power remains uncapped.

Prime Minister Andy Burnham said in September that mayors would gain the power to add fees for guests in hotels and holiday lets across England. Hoteliers across the country had already called the proposal “the last thing we need,” establishing the hospitality sector’s early opposition.

What does the levy change for operators?

The bill adds a collection and remittance duty before any broader question about demand. At the 5% level backed by the 10 mayors, the charge would scale directly with each covered accommodation bill. Above that level, the legislation as announced leaves rates uncapped.

Oxford Economics’ analysis of a 5% holiday tax estimated that it would cost 33,000 jobs, increase the tax burden on holidaymakers by £1.6 billion and cost the Treasury almost £700 million. Those modeled effects sit alongside the government’s comparison with visitor levies in Germany, Italy, the United States, the Netherlands and Canada.

UKHospitality chief executive Allen Simpson said: “It’s genuinely shocking to see the government bring forward legislation to hike the cost of a family holiday and risk 33,000 jobs, because that’s exactly what its Holiday Tax Bill will do.”

Simpson said uncapped rates could raise prices without any legal requirement that the money support hospitality, tourism or the visitor economy. He argued that hard-working families would carry the cost, with coastal and rural communities most exposed to employment losses.

Butlin’s chief executive Jon Hendry Pickup said: “Without a binding national cap, the Holiday Tax risks creating unfair differences for working families taking holidays in the UK. Data already shows that higher holiday costs would make people reconsider their plans, putting local businesses and jobs at risk.”

Pickup also called the provider collection requirement a transfer of “bureaucracy and red tape” onto businesses. He said local authorities should consult affected businesses meaningfully on whether to impose a levy before deciding how it would operate.

Who pays, and who does not?

Hotels and other accommodation providers would handle both “accounting for and paying” the levy. Relief for small-scale hosts would be narrower: occasional hosts would pay only if they earned above a set amount.

• The charge would apply to the first 28 consecutive days of each stay.
• National exemptions would cover student accommodation, care homes, children’s homes and school boarding houses.
• Mayors and local leaders could add limited local exemptions for camping pitches.

How local discretion would work

Before introducing a levy, local authorities would have to publish a draft plan and impact assessment and consult local residents and businesses. The government says revenue can improve public toilets and parks, support cultural events, provide security and fund destination promotion.

Levy authorities would also publish an annual report detailing what they raise and their future spending plans. The bill includes no legal requirement that the money benefit hospitality, tourism or the visitor economy, the point raised by UKHospitality.

In Foundation Strategic Authorities, which are non-mayoral public bodies, a levy would require unanimous support. The proposal has a longer timeline: plans for a tourist tax were first raised under Starmer’s government, and the 2025 Budget confirmed that regional mayors in England would receive power to introduce a local overnight visitor levy.

What changes for operators depends on the final rules: meaningful consultation, enforceable spending safeguards and a predictable ceiling could ease collection and pricing concerns. Without them, businesses shoulder red tape while visitors encounter uneven charges.