The government is proposing to allow English mayors to introduce visitor levies/ ‘tourist taxes’ to help councils raise money to improve local economies.
As of December 2025, English local authorities do not have the power to introduce a visitor levy or ‘tourist tax’. The Scottish and Welsh parliaments have both passed legislation permitting their local authorities to introduce a visitor levy. Some UK local authority areas, such as Liverpool and Manchester, have used workarounds to introduce a levy based on business improvement districts.
This may change soon. The government published a consultation on 26 November 2025 titled Overnight visitor levy in England. It proposed giving combined authority mayors, and the Mayor of London, powers to establish a visitor levy. This Insight sets out the main proposals contained in the consultation.
The government suggests that a visitor levy set by English mayors would apply to hotels, guesthouses, bed and breakfasts, hostels, campsites, self-catering properties, and short-term lets, as well as university and religious accommodation when let commercially. Moving vehicles and care homes would not be covered. Traveller sites, temporary accommodation for homeless people, and stays in “non-profit accommodation provided for shelter, respite, or refuge” would be exempt.
The levy would be set as a percentage of the price of the accommodation. This is similar to the Scottish system. The Welsh visitor levy is a flat rate, which Welsh councils may choose to introduce or not.
Value Added Tax (VAT) would be payable on the total cost of the overnight stay, including the levy. This is because the accommodation provider, not the visitor, is required to pay the levy.
Mayors would be able to set local exemptions. They would also be able to choose to set a visitor levy in some of their local authority areas but not others, subject to the consent of the local authority in question. Members of the combined authority would be able to reject a levy on a two-thirds majority.
The consultation asks for views on whether a national cap should be applied on the number of consecutive nights for which a levy can be charged. This would mean that any stay for longer than (for example) 14 nights would be charged a visitor levy for only 14 nights.
Some initial estimates of the likely revenue from a visitor levy have been published. The BBC suggested that a £1 per night levy in London could raise £91 million per year. Figures suggested for other areas include £11 million for Liverpool City Region; £8 million to £40 million for Greater Manchester; and £52 million for York and North Yorkshire. These figures should be treated with caution before further details of the levy are known.
The consultation suggests that English mayors could spend revenue from the levy on “broader initiatives which have a positive impact on the region’s economic health”. This is a broader use of the revenues than is permitted in the Scottish and Welsh visitor levy systems, which require revenues to be spent on matters related to the visitor economy and destination management.
The government also states that mayors should be able to distribute the revenues to local authorities and asks whether this should apply to a minimum share of the revenue from the levy.
The government said:
Mayors will be empowered to deliver more long-term, locally led investment in transport, regeneration and cultural assets that can unlock growth and make places more attractive for residents, businesses and visitors. The Government will not compel any Mayor to introduce this levy, nor will central government reduce funding for Mayors if they decide to do so. (MHCLG / HM Treasury, Overnight visitor levy in England, 2025, p49)
Mayors would have to publish a prospectus and undertake a formal public consultation before introducing a levy. The prospectus would include proposed rates, areas and use of the revenues. This reflects similar requirements in Scotland and Wales. It is also similar to legal requirements for the introduction of a business improvement district.
The government asks whether foundation strategic authorities (FSAs) should be permitted to establish a visitor levy. FSAs are to be designated by the government in areas that don’t have mayoral strategic authorities, as set out in the English Devolution and Community Empowerment Bill. Non-mayoral combined authorities or single unitary authorities can be designated as FSAs.
The consultation confirmed that English mayors had discussed using the ‘right to request,’ to be introduced by the English Devolution and Community Empowerment Bill, to seek powers to introduce an overnight visitor levy. The ‘right to request’ allows mayors to formally ask the government that they be granted additional powers.
If the government decides to introduce a visitor levy for English mayors (or other local authorities), primary legislation will be required.
It is possible that this could be done via amendments to the English Devolution and Community Empowerment Bill. Whether this is possible depends upon timings. The consultation closes on 18 February 2026, and the bill is in the House of Lords at the time of writing.
If this is not possible, additional legislative time would be needed to implement the visitor levy. This would mean that visitor levies might not be introduced until the 2027/28 or 2028/29 financial years.
More information is available in the Library research briefing Visitor levies: policy and debates.
About the author: Mark Sandford is a researcher at the House of Commons Library, specialising in local government and devolution in England.
Image: Elizabeth Tower and Palace of Westminster, Autumn 2025
Retrospective tax legislation imposes or increases a tax charge prior to the legislation being introduced. Although this is a controversial practice, retrospective provisions are often introduced to mitigate the risks to the public finances from tax avoidance.
The installation of energy-saving materials (such as solar panels) on eligible buildings is zero-rated for VAT until 31 March 2027.
Fuel duty is charged at a rate of 52.95p per litre on unleaded petrol and diesel. Fuel duty is planned to increase by 3p per litre on 1 January 2027, the first increase since 2011.