The Scottish Government has introduced legislation permitting local authorities to levy ‘tourist taxes’ on short-stay accommodation, and the Welsh Government has also stated plans to introduce similar legislation in the Senedd.

This Insight explains what tourist taxes are and summarises the proposals to introduce them in Scotland, Wales and England.

What is a tourist tax?

A ‘tourist tax’ – also known as a ‘transient visitor levy’ – is a levy on the occupation of short-stay accommodation in a local authority area. Taxes of this kind are frequently imposed in cities with strong tourist economies, in countries such as Canada, Spain, Germany, Belgium and France, but they are not currently permitted by law anywhere in the UK.

A tourist tax normally takes the form of a charge per occupied bed or room per night, levied on short-term accommodation providers. The charge can be set at a flat rate or a series of flat rates (for example, €2 per bed per night), or it can be set as a percentage of the price of the bed or room.

Tourist taxes are sometimes set at different rates for different times of the year. Some cities exempt, or give discounts for, beds occupied by children or those travelling for medical reasons. Others impose different rates on (for instance) campsites, bed and breakfasts, non-serviced accommodation, or hotels with different star ratings.

Proposals for a tourist tax in Scotland

The Visitor Levy (Scotland) Bill was presented to the Scottish Parliament on 24 May 2023. It would permit Scottish local authorities to set a transient visitor levy on accommodation providers as a percentage rate of the cost of the “purchase of overnight accommodation”.

Authorities would be permitted to set different rates for different purposes or different areas within a local authority and would have to specify how the revenues will be spent.

This followed the Scottish Government’s consultation in September 2019 on introducing a ‘transient visitor levy’, and its 2022–23 Programme for Government, which included a proposal for a bill to introduce a ‘local visitor levy’.

Proposals for a tourist tax in Wales

Following the Labour–Plaid Cymru cooperation agreement of 2021, the Welsh Government published a consultation on a visitor levy in September 2022, closing on 13 December 2022. The consultation proposed:

  • A levy payable by visitors, to be collected by accommodation providers. The consultation did not express a view on the best approach. Its preference was for the same type of approach to be applied across Wales.
  • The consultation did not express a view on the appropriate rate, but it favoured the same tax rate being applied across Wales.
  • There would be a ‘cap’ on the number of nights for which a visitor levy would apply.
  • Visitor levy revenues could be spent at the discretion of the local authority, rather than being reserved for particular types of spending (hypothecated).
  • Groups such as people staying at traveller sites and people fleeing domestic violence would be exempted.

The Welsh Government stated in March 2023 that it plans to introduce legislation permitting local authorities to introduce a tourist tax, but it has not provided any definitive timescale for this. It also published:

Can a tourist tax be levied in England?

At present, in England, neither the central government nor local councils have the power to introduce a tourist tax. Primary legislation would be required to permit this. The UK Government stated on 18 September 2023 that it has no plans to do this.

However, Manchester and Liverpool city councils, among others, have introduced a form of tourism levy via a legal workaround (see below).

How much money could a tourist tax raise in England?

The Institute for Fiscal Studies estimated that a charge of £1 per person per night would raise approximately £420 million per year in England.

The Northern Powerhouse Partnership estimated that £428 million could be raised. By comparison, council tax raises about £30 billion and business rates about £25 billion per year in England.

Examples of the rates imposed in a selection of European and other international cities can be found in the Greater London Authority’s report Options for a tourism levy for London (PDF). This report also states that “in most global cities, tourism levies must be spent on activities that support the sector”.

Taxes on accommodation through Business Improvement Districts

Manchester and Liverpool city councils both introduced a tourism-based Business Improvement District (BID) as of 1 April 2023. This is a legal workaround, using existing legal powers, to establishing a form of tourist tax.

BIDs collect additional business rates payments (‘BID levies’) from businesses operating in specified geographical areas. They are established by local business groups, following a referendum of businesses in the area concerned. Further information is available in the Library briefing Business Improvement Districts.

A BID must hold a fresh referendum at least every five years in order to renew its existence. BIDs are managed, and BID levy rates set, by the management board, not by the local authority. Unlike a tourist tax, a BID levy falls on business rate-payers, not on visitors.


Manchester introduced an ‘accommodation BID’ from 1 April 2023, following a ballot on 7 November 2022. The BID levy is payable by hotels and serviced apartments with a rateable value of £75,000 or more, in an area within Manchester city centre and a small adjoining part of Salford.

Like a typical tourist tax, the BID levy amount for individual properties is based on the occupancy of the accommodation. It is known as the “City Visitor Charge” and participating businesses are encouraged to itemise it on guests’ bills.

The Manchester business plan expects the BID levy to raise £3.5 million to £3.8 million per year between 2023 and 2028.


The accommodation BID in Liverpool was also established on 1 April 2023, with the BID levy payable in respect of accommodation properties with a rateable value of £45,000 or more, with a cap of £50,000 per property. The BID covers the whole of the city of Liverpool.

The levy is 1.6% of a property’s rateable value, rising to 4.5% in 2024/25 and 2025/26. It is expected to raise £939,000 per year in the latter two years.

The levy is administered by Liverpool BID Company, which already operates a ‘retail and leisure’ BID and a ‘culture and commerce’ BID.

Other tourism BIDs in the UK

Other examples of tourism BIDs exist in Blackpool, Great Yarmouth, Tweed Valley, Moray and Speyside, and Loch Ness.

The Scottish BIDs cover types of business such as accommodation, restaurants, museums and galleries, and self-catering holiday lets. The amount of BID levy paid is based on the rateable value of a business’s property.

About the author: Mark Sandford is a researcher at the House of Commons Library specialising in local government and devolution in England.

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