Regional mayors gain power to impose uncapped visitor levy on holidays
Andy Burnham, in his role overseeing devolution policy for the Government, has approved plans allowing England's regional mayors to impose an uncapped "overnight visitor levy" on hotel, B&B and holiday let stays, prompting accusations from the Conservatives and business groups that ministers are burdening struggling families with another tax rise. Critics argue the levy, expected to be set at around 5 per cent in Labour-run areas, will inflate the cost of UK staycations and damage the hospitality sector, which they say has already been hit hard by rises in business rates and employment costs.
The tax will apply as a percentage of accommodation charges rather than a flat fee, meaning a family paying £2,000 for a stay could face an extra £100. Oxford Economics figures cited by UK Hospitality suggest that by 2030 the levy could cost the Treasury £688 million in lost tax receipts, cut hospitality investment by £101 million, reduce overnight stays by 11.9 million and cost 33,000 jobs, amid an overall £1.8 billion fall in tourism spending. England's 14 regional mayors will gain the power to introduce the levy from 2028, with areas such as the Cotswolds set to follow after local government reorganisation; similar levies already exist in Manchester, Liverpool, Edinburgh and Cardiff, while trade bodies including ABTA, UK Hospitality and Whitbread have condemned the uncapped English scheme as damaging to competitiveness.
- Mayors given power to charge uncapped visitor levy on UK stays from 2028
- Critics warn of £1.6bn cost to holidaymakers and 33,000 job losses
- Business groups call the uncapped, percentage-based tax "hugely damaging"
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Regional mayors in England already control areas such as transport and housing in their regions, and the Government has been extending their powers as part of a wider devolution agenda. This latest change concerns tourism: mayors will be allowed to charge visitors an extra fee on overnight stays in hotels, bed and breakfasts and holiday lets, on top of what businesses already charge. Similar charges already exist in Scotland and Wales, and in some English cities, but this would extend the power more widely and without a fixed upper limit.
The tax works as a percentage added to the cost of accommodation, rather than a set fee per night, so the amount paid would rise in line with how much a stay costs. It would be up to individual mayors whether to introduce it and at what level, meaning it could vary between regions. The change is expected to take effect from 2028.
The hospitality and travel industries, along with opposition politicians, have raised concerns about the potential impact on tourism spending, jobs and the cost of holidays in the UK, arguing the sector already faces higher costs from other recent policy changes. Supporters of devolving this power argue it gives local leaders more control over funding for their areas. The debate touches on wider questions about the cost of living, the health of the hospitality industry, and how much freedom regional government should have to set its own taxes.
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The case for
Supporters, including regional mayors and devolution advocates, argue that giving local leaders the power to levy overnight stays is a sensible extension of fiscal devolution, allowing areas that bear the costs of tourism, such as strain on public services, transport and cleaning, to fund them directly from visitors rather than local council tax payers. They point out that modest visitor levies of around five per cent are common in major European cities and already operate successfully in Manchester, Liverpool, Edinburgh and Cardiff without collapsing local tourism. They also argue that elected mayors, being accountable to their electorates, are best placed to judge the right balance for their own area rather than having a blanket cap imposed from Westminster.
The case against
Critics, including the Conservatives, trade bodies such as ABTA and UK Hospitality, and businesses like Whitbread, argue that an uncapped levy adds a further tax burden on families already squeezed by the cost of living, on top of a hospitality sector they say has been weakened by recent rises in business rates and employment costs. They cite Oxford Economics modelling suggesting the levy could ultimately shrink Treasury tax receipts, hospitality investment, overnight stays and jobs by 2030, arguing it would be self-defeating even in narrow fiscal terms. They further warn that leaving the levy uncapped, rather than fixed as in comparable schemes elsewhere, creates unpredictable costs for operators and risks making UK staycations less competitive against overseas alternatives.
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Originally published by Daily Mail as “Burnham’s holiday tax to hammer families on staycations: PM is accused of launching fresh raid on struggling Brits with unlimited visitor levy”.