England advances overnight visitor levy giving mayors new fiscal powers

Ministers move the levy toward implementation

England’s government is advancing plans to let mayors impose a levy on paid overnight accommodation, including hotels and Airbnb-style short-term rentals. Ministers were expected to provide mayors with further details on September 10, building on a devolution commitment that Prime Minister Andy Burnham presented to Parliament earlier in the month.

The latest proposal would calculate the levy as a percentage of accommodation cost rather than a uniform nightly fee. That design is intended to limit the burden on budget stays while allowing local leaders to decide whether a charge suits their area. Mayors would also determine how locally raised revenue is invested, with transport, infrastructure, public services and the visitor economy among the stated priorities.

The policy expands local fiscal authority

The measure is part of a broader attempt to shift spending and economic-development powers away from central government. In his September 1 Commons statement, Burnham said English devolution would begin with authority to set an overnight visitor levy, expected to commence toward the end of the 2027-28 financial year. The government had previously consulted on making the power discretionary rather than imposing a nationwide charge.

Supporters argue that visitors should contribute to the services and infrastructure they use and note that comparable charges already operate in many international cities. Greater Manchester introduced a room charge in 2023, while Scotland and Wales have developed separate visitor-levy frameworks. The English proposal would give strategic mayoral authorities a similar funding tool while leaving the adoption decision local.

Hospitality groups warn about costs

The hospitality industry says an open-ended levy could reduce demand, shorten tourism seasons or place jobs at risk in destinations already dealing with higher tax and employment costs. Its representatives are pressing for limits on the rate and clearer safeguards. The percentage model could soften the effect on cheaper accommodation, but much will depend on the final legislation and the discretion granted to individual mayors.

The next points to watch are the government’s formal response to consultation, the legislation’s timetable, any statutory cap and the rules governing short-term rentals. Local investment requirements will also matter: the political case for the levy rests on whether residents and businesses can see revenue returning to transport, events, public spaces and other services that sustain tourism rather than disappearing into general budgets.