Labour Mayors in England Back 5% Tourist Tax Cap

Labour’s regional mayors in England have pledged to cap a proposed fee on overnight stays at 5%, after hospitality bosses warned the charge could threaten jobs.

The Government plans to give local leaders new powers to levy an “uncapped” charge on visitors, calculated as a percentage of the cost of hotels, bed and breakfasts and other forms of accommodation. The measure has been branded a “tourist tax”.

Labour’s mayors in 10 city regions said they would apply a voluntary ceiling if they decide to introduce the levy, saying they had listened to concerns about the impact on costs.

Labour’s “Reasonable Ceiling” Of 5%

In a letter to Chancellor John Healey and Local Government Secretary Angela Rayner, Labour metro mayors said 5% was a “reasonable ceiling” that would stop charges becoming excessive or varying sharply between areas.

They said the approach would still allow room for differences between regions and would provide “meaningful investment”, but that any future levy would be subject to local consultation.

The signatories are mayors for London, Greater Manchester, Liverpool City Region, West Midlands, North East, West of England, West Yorkshire, South Yorkshire, East Midlands and York and North Yorkshire.

Exemptions Allowed, But Not Blanket Cuts

Under the Government’s plans, local leaders and other bodies that would take decisions where there is no mayor would need to set out by early 2028 how the revenue would be reinvested.

Authorities would also be able to offer exemptions, including for campsites. However, they would not be allowed to exempt whole localities across their regions, a rule aimed at avoiding confusion for visitors and businesses.

The Government said it would introduce legislation “in due course” to create the levy. It would apply both to people staying in England and to visitors from abroad.

It has also said it intends to protect “budget holidays” by ensuring low-cost accommodation pays the lowest levy, and that extra money could be directed to high streets and local transport.

Opposition And Reservations From Other Parties

Reform UK’s two regional mayors and the two Conservative mayors are expected to oppose the levy. Their national parties have criticised the policy, and a number of other local leaders have also expressed caution about introducing it.

Conservative shadow housing secretary David Simmonds said hotels already pay 20% VAT and argued that the new charge would add a further burden for travellers.

Nigel Farage said his party’s mayors in Greater Lincolnshire and Hull and East Yorkshire would not implement the levy, describing it as a holiday tax.

Some areas already have similar schemes run voluntarily by hospitality industry groups, rather than through mayoral powers. Manchester operates a £1 per room per night City Visitor Charge, introduced when Andy Burnham was mayor. Liverpool has a £2 nightly charge.

Hospitality Groups Warn Of Higher Costs

UKHospitality said the levy would place jobs at risk. Its chief executive, Allen Simpson, said it could add around £100 to £120 to the price of a typical family holiday in England and argued that mayors might take advantage of the fact there is, in theory, no cap.

He pointed to wider pressures on local government finances, warning that devolving a new tax power would encourage use until political limits are reached.

A business operator who runs caravan parks in Skegness told the BBC he believed the extra cost would “kill” the industry, arguing that many tourist resorts already rely on visitors with limited budgets.

The policy draws comparisons with schemes in other parts of the UK and abroad. Scotland allows local authorities to charge a visitor levy on overnight accommodation, with Edinburgh setting the rate at 5% for stays in hotels, bed and breakfasts and self-catering facilities, capped at five nights. In Wales, a capped levy of £1.30 per person per night is due to be introduced in April next year, with roll-out decided by local authorities.

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11 September 2026