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14/7/25 8:13 pm
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Short-let landlords would have to charge guests a nightly fee if Rachel Reeves goes ahead with plans in next week’s Budget.
The Chancellor is reportedly preparing to give mayors the power to raise taxes by charging tourists on the cost of an overnight stay in their cities, reports The Times. She is thought to have been persuaded by evidence from cities across Europe suggesting that tourist demand is not dampened by the levy.
Other parts of the UK are already on board with the idea. Edinburgh will become the first city in Scotland to introduce a tourist tax at 5% next July, after the Scottish parliament passed a law last year granting councils the power to implement their own visitor levies. In Wales, councils will have the power to charge £1.30 a person a night tax for most accommodation from April 2027.
Government sources told The Times that England was an outlier among developed countries for not having a tourism tax. It believes the changes will be introduced using amendments to the English Devolution and Community Empowerment Bill, which is going through Parliament.
The tax could raise hundreds of millions of pounds to invest in transport and public services. This summer a coalition of mayors across England including London mayor Sadiq Khan and the Greater Manchester mayor Andy Burnham wrote to Culture Secretary Lisa Nandy and Reeves urging them to introduce a visitor levy.
Trade body UKHospitality estimates that a 5% holiday tax would cost Britons £518 million in additional costs and fears the fall-out. Chair Kate Nicholls says: “I know the government is worried about the cost of living, but this holiday tax is little more than a higher VAT rate for holidaymakers.
“Brits take more than 89 million overnight trips in England and stay for a total of 255 million nights. This is a bill we will all have to pay and will only serve to ramp up prices and drive inflation.”
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