England is getting a tourist tax, and the people who will decide how much it costs are regional mayors rather than the Treasury. On 10 September the Ministry of Housing, Communities and Local Government confirmed that mayors and the leaders of Foundation Strategic Authorities will be handed the power to charge an Overnight Visitor Levy on hotel, guesthouse and short-let stays. Within a day the British Independent Retailers Association (Bira) had warned that unless the money is visibly spent on the high streets that serve visitors, the levy risks taking spending out of local economies rather than putting it back in.
The announcement closes a consultation that ran from 26 November 2025 to 18 February 2026 and sets up a bill that the government says will be introduced “in due course”. For shopkeepers in Bath, York, Liverpool, Brighton or the Lake District, the practical questions are simple: how much will visitors pay, when does it start, who collects it, and does any of it come back to the street outside the shop door? This article works through what has been confirmed, what is still open, and what the retail and hospitality trade bodies are demanding.
In short
- What was announced: on 10 September 2026 the government confirmed that English mayors and Foundation Strategic Authority leaders can introduce an Overnight Visitor Levy, charged as a percentage of the cost of a stay rather than a flat fee.
- No legal cap: the government has not set a maximum rate, although Labour regional mayors have pledged to stay at or below 5 per cent and London mayor Sadiq Khan says the capital will not exceed that level.
- Timing: a bill follows, mayors must publish spending plans by early 2028, and the levy is expected to be live before the end of the current parliament in 2029.
- Who is exempt: campsites, temporary accommodation, shelters and refuges are excluded; hotels, B&Bs, guesthouses and holiday lets are in scope and will collect the charge.
- The retail argument: Bira, which represents more than 6,000 independent shops, wants “cast-iron assurances” that money raised in a town is spent in that town; UKHospitality warns that a 5 per cent levy could cost 11.9 million visitor nights a year by 2030.
What exactly did the government confirm on 10 September?
The press release, issued by the Ministry of Housing, Communities and Local Government under Secretary of State Angela Rayner, frames the levy as part of the government’s devolution programme. Mayors and the leaders of Foundation Strategic Authorities will be able to choose whether to introduce a levy on overnight stays and, if they do, to set the rate and decide how the proceeds are spent. The release lists high streets, public transport and tourism as the intended destinations for the money.
Three design decisions are fixed by the announcement. The levy will be a percentage of the accommodation cost rather than a flat per-night fee, which the government says protects families on budget holidays from paying the same as guests in a five-star hotel. Accommodation providers, not visitors, will be responsible for paying the levy over to the strategic authority. And the scheme is optional: an area whose mayor does not want a levy will not have one.
The release also lists the exemptions. Campsites, temporary accommodation, shelters and refuges are outside the scheme. Everything else that sells a night’s stay commercially, from a chain hotel to a spare-room short let, is in scope, subject to the detail of the bill.
Rayner’s quote in the release is deliberately local: the measure, she says, “will give mayors the choice to raise and reinvest funding where it’s needed most”, with decisions taken by “people who know their area best”. The official text is on the gov.uk announcement page.
The numbers the government is leaning on
The release cites 42.6 million inbound visits to the UK in 2024, £32.5 billion of visitor spending (about USD 43.9 billion at Friday’s rate of roughly 1.352 dollars to the pound) and 293 million nights stayed. It singles out the Liverpool City Region, where the visitor economy is put at £6.8 billion a year supporting 55,000 jobs. Those are the figures ministers will use to argue that a small percentage of accommodation spend can fund a lot of local investment.
Why is there no cap on the rate?
The most contested detail is the one that is missing. The consultation had floated a percentage-based charge, and the expectation in Whitehall and in the industry was that the rate would land at or below 5 per cent. The government has confirmed the percentage approach but has not written a ceiling into the announcement, saying instead that local authorities will be expected to set proportionate rates.
Mayors have tried to fill the gap themselves. Sadiq Khan said the levy “needs to happen sooner rather than later” and indicated that London’s rate would not exceed 5 per cent of the cost of a stay. Labour regional mayors have collectively pledged to stay within the same 5 per cent limit, according to Euronews and Blooloop. That is a political promise rather than a statutory one, and the hospitality trade has noticed the difference.
UKHospitality chief executive Allen Simpson put the objection bluntly, warning that “local mayors are going to pull that lever until it snaps”. The trade body’s modelling, reported by Euronews, suggests a 5 per cent levy would mean 11.9 million fewer visitor nights a year by 2030, £1.8 billion less tourism spending (about USD 2.4 billion) and close to 33,000 fewer jobs. The government has not published a competing estimate.
What a percentage levy costs in practice
Because the charge is a share of the bill, the same rate produces very different cash amounts for different visitors. The table below shows illustrative sums at 3 per cent and 5 per cent, before any question of whether the levy sits on top of the VAT-inclusive price, a detail that the bill will have to settle.
| Stay | Accommodation bill | Levy at 3% | Levy at 5% |
|---|---|---|---|
| Couple, budget hotel, 2 nights at £85 | £170 | £5.10 | £8.50 |
| Couple, city-centre hotel, 2 nights at £120 | £240 | £7.20 | £12.00 |
| Family, holiday let, 4 nights at £200 | £800 | £24.00 | £40.00 |
| Business traveller, 1 night at £160 | £160 | £4.80 | £8.00 |
| Weekend break, 3 nights at £300 | £900 | £27.00 | £45.00 |
Set against a typical visitor’s spending outside the hotel, these are modest sums. That is the government’s point. The retail counter-argument is that the money is not new: for most households the holiday budget is fixed, so a £40 levy on a family break is £40 that does not reach the ice-cream parlour, the bookshop or the deli.
How does England’s levy compare with the schemes already running?
England is late to this. Scotland legislated first, Wales follows next year, and two English cities have been running voluntary charges through Business Improvement Districts because they had no power to tax. The new mayoral levy is the first English scheme with statutory force, and it borrows from all of them.
| Scheme | Basis | Rate | Status |
|---|---|---|---|
| England: mayoral Overnight Visitor Levy | Percentage of accommodation cost | No statutory cap; mayors pledge 5% or below | Confirmed 10 Sep 2026; bill to follow; live by 2029 |
| Edinburgh visitor levy | Percentage of accommodation cost | 5%, capped at five consecutive nights | Charging since July 2026 |
| Wales visitor levy | Flat per person per night | Up to £1.30 | From April 2027, council by council |
| Manchester City Visitor Charge | Flat per room per night via Accommodation BID | £1 | Running since 2023 for larger properties |
| Liverpool city centre charge | Flat per room per night via Accommodation BID | Reportedly £2 | Running since 2025 |
Two lessons from the existing schemes matter for shops. The first is that percentage levies raise far more from expensive stays than flat fees do, which is why the government prefers them and why the hospitality lobby is more worried about England than about Wales. The second is that both the Manchester and Liverpool charges were designed by the hotels themselves through a BID, so the money went to marketing and events that the hotels wanted. A mayoral levy breaks that link: the accommodation sector collects, the strategic authority spends.
Edinburgh as the live test case
Edinburgh’s 5 per cent charge has been running since the summer of 2026 and is the closest model to what English mayors are being offered. Its five-night cap is a design feature English mayors could copy to soften the cost of longer stays. The Scottish scheme also shows how long these things take: the Scottish legislation passed in 2024 and the first charge landed two years later, which is roughly the timetable the English bill implies.
When will visitors actually start paying?
Not soon. The government has said a bill will be introduced “in due course” and the 2026 King’s Speech, according to the House of Commons Library briefing on the proposal, promised an Overnight Visitor Levy Bill in the 2026–27 session. Once the bill is law, each mayor will have to consult locally, design a scheme and set a rate. The government’s own milestone is that mayors and Foundation Strategic Authority leaders should have spending plans published by early 2028, and reporting from Euronews and Blooloop puts the first charges before the end of the parliament in 2029.
That timetable means the levy is a 2028–2029 event for most high streets. Bath, Bristol, Nottingham, Liverpool and London have mayors who have already said they want to move; Skegness and Hartlepool are among places whose local leaders have reportedly said they do not. The practical consequence for a shop owner is that the next two years are the window to influence how the money is spent, not the charge itself.
Which mayors have said what
Claire Ward, mayor of the East Midlands, responded on the day of the announcement by saying the levy is “a way that we can sustain investment, year after year” and tying it to the East Midlands Combined County Authority’s target of growing the region’s visitor economy by at least £1 billion by 2035. She listed major events, culture and heritage, public spaces, destination marketing and support for visitor-economy businesses as the likely uses.
Helen Godwin, mayor of the West of England, said proceeds could fund late-night bus services, public spaces in central Bath and Bristol, and tourism-supporting sectors and attractions. Her office’s figures are unusually useful for retailers: visitor spending in the region is put at £2.7 billion a year, supporting more than 43,000 jobs, and retail accounts for 33 per cent of that spending, with food and drink a further 30 per cent. In other words, shops and cafes take nearly two thirds of what visitors spend in the West of England, and hotels take a minority.
Why are independent retailers worried?
Bira’s position, set out on 11 September and reported by Talking Retail and Asian Trader, is not opposition to the levy in principle. Chief executive Andrew Goodacre said the association understands why local leaders want the power and supports giving mayors more control over tourism investment. The concern is where the money goes afterwards.
“Every extra pound a visitor pays in levy is a pound they don’t spend in the independent shops and cafes on the high street,” Goodacre said. “If this money isn’t visibly and directly reinvested into the high streets that serve visitors, we risk taking money out of local economies rather than putting it back in.” Bira says it has reviewed the two mayoral strategic plans that have been published so far and found the high street barely mentioned in either.
The association’s ask is specific: “cast-iron assurances that the money raised in a town or city will actually be spent supporting the businesses in that same town or city.” That is a harder promise than it sounds, because a strategic authority covers many towns, and a levy raised in a tourist hotspot will be politically attractive to spend on a struggling town nearby that raised nothing. The same tension already exists with business rates, which are pooled and redistributed, and it is one of the reasons the high street closure programme continues: the TG Jones closures this month are landing in exactly the kind of mid-sized towns that a levy is unlikely to fund.
The London version of the same argument
London’s boroughs made the same point earlier in the year. In February London Councils asked for boroughs to keep at least half of any levy raised in their area, with the remainder going to pan-London services through a partnership between the mayor and the boroughs. Cllr Claire Holland, chair of London Councils, argued that “boroughs shoulder many of the day-to-day costs associated with tourism, from maintaining streets and transport hubs, to supporting cultural venues and managing community safety pressures”. The announcement does not settle how proceeds are split between a mayor and the councils beneath them.
Does a tourist tax actually reduce what visitors spend in shops?
The evidence is contested, and the honest answer is that it depends on the rate and on who the visitors are. Most European cities that charge a levy, including Amsterdam, Paris, Rome and Barcelona, have continued to grow visitor numbers, which is the argument mayors make. The hospitality sector points to survey work instead: World Travel & Tourism Council research reported by Euronews found that 29 per cent of travellers from the United States, France and Germany would consider an alternative destination or decide not to visit if a €10 charge were introduced, and 39 per cent of UK residents said the same about a £10 levy.
For a shop, the relevant question is narrower than “will visitors still come”. It is whether the marginal visitor who is put off by a charge is the one who spends on the high street. Domestic weekend visitors, who dominate market towns and seaside resorts, are the most price-sensitive group and also the group most likely to spend in independent shops rather than in hotel restaurants. That is why Bira, rather than the big chains, has been first to object. National retailers with a store in every city are indifferent to where the visitor goes; a Whitby fudge shop is not.
The wider backdrop is a consumer already cutting back. The BRC-KPMG monitor for August showed total UK retail sales growth slowing to 0.7 per cent, with non-food sales down 0.8 per cent on the year, and this week’s John Lewis Partnership results blamed weaker demand for big-ticket purchases for a first-half loss that more than doubled. A levy that lands in 2028 or 2029 will meet whatever consumer exists then, but the trade bodies are negotiating now.
What the hospitality sector has been offered in return
The same release restates a package aimed at hotels and pubs, which is one reason the government has been willing to face down the hospitality lobby on the levy. It lists a business rates reduction for pubs, clubs and live music venues (described in the release as a 20 per cent cut), the tax break on draught pints, corporation tax capped at 25 per cent, a review of how hotels and pubs are valued for business rates, and £3.38 million for VisitEngland’s Connected Destinations Fund.
None of that is for shops. The retail, hospitality and leisure business rates multipliers introduced in April 2026 are the main relief independents have, and Bira has argued elsewhere that the reforms left many small retailers paying more than they did under the old 75 per cent discount. From a shop’s point of view, the levy is therefore a tax that reduces the visitor’s spending power, collected by a sector that has just received targeted relief, and spent by an authority whose published plans barely mention the high street. That is the argument Goodacre is making, and it is a coherent one even if the sums involved per visitor are small.
Where the money could go if shops win the argument
The government’s own list of intended uses starts with high streets, so the wording is there to be held to. Bira’s practical suggestions in earlier submissions have included free or cheaper parking in town centres, funding for community policing that deals with retail crime, and support for the sort of local marketplaces and loyalty schemes that keep visitor spend circulating among independents rather than leaking to national chains and online. Late-night buses of the kind Helen Godwin has proposed also help shops that stay open into the evening, provided the routes serve the high street rather than only the hotels.
What should a high street business do now?
The levy will not change a till roll this year or next. What it changes immediately is the local politics of tourism money, and businesses that engage in the next 12 to 18 months will shape spending plans that must be published by early 2028. Four steps are worth taking.
- Find out whether your area has a mayor or Foundation Strategic Authority. If it does not, the power does not apply to you yet, although the government’s devolution programme is extending strategic authorities across England.
- Get on the consultation list. Each mayor has committed to consulting businesses and residents before setting a rate. The West of England and East Midlands have already said so publicly; make sure the local chamber of trade, BID or Bira branch is registered.
- Ask for a published split. London Councils’ 50 per cent formula is a useful template: a fixed share of levy revenue to the borough or district where it was raised, ring-fenced for town-centre services.
- Measure your own visitor dependence. Shops that know what share of takings comes from visitors, and on which days, can argue with numbers rather than anecdotes. Businesses that have lost passing trade before, like the florist that replaced walk-ins with subscriptions after a road closure, tend to be the ones that already track this.
There is also a defensive point. If a levy nudges visitors toward shorter stays, the businesses that suffer most are the ones that depend on a second or third day of browsing. Independents that have built local delivery and click-and-collect can keep selling to a visitor who has gone home, which is the only form of insurance against a shorter trip that a shop controls itself.
Who supports the levy and who opposes it?
The coalition in favour is broader than the coalition against, which is why the policy survived a consultation in which the hospitality sector campaigned hard. Tristram Hunt, director of the V&A, said the initiative “offers city mayors and local leaders across the UK a transformative chance to support museums, galleries and visitor attractions”. Laura Pye, director of National Museums Liverpool, said a tourist tax would “further improve the region for local people and tourists alike”. Mayors in London, the West of England, the East Midlands and the Liverpool City Region have all welcomed the powers.
Against are UKHospitality, which argues the levy “could add costs for travellers and businesses and potentially weaken the competitiveness of domestic tourism”, and the parts of the accommodation sector that will have to collect it. Bira sits in the middle: in favour of the principle, sceptical of the delivery. The Conservatives and Reform UK have both attacked the wider high street agenda as likely to produce more empty units unless business costs fall, and the levy gives them a fresh line of attack in seaside and market-town seats.
| Organisation | Position | Key demand or warning |
|---|---|---|
| MHCLG (Angela Rayner) | For | Optional, percentage-based, spent on high streets, transport and tourism |
| Labour regional mayors | For | Pledge to stay at or below 5 per cent |
| London Councils | For, with conditions | Boroughs keep at least 50 per cent of what they raise |
| Bira (6,000+ independents) | Conditional | Money raised in a town must be spent in that town |
| UKHospitality | Against | Warns of 11.9m fewer visitor nights and 33,000 jobs by 2030 at 5 per cent |
| V&A, National Museums Liverpool | For | Funding for attractions and culture |
What is still undecided?
A surprising amount. The bill has not been published, so the legal definition of “accommodation” is not fixed, and the treatment of short lets booked through platforms will be watched closely by every seaside town with a glut of holiday flats. Whether the levy is calculated on the VAT-inclusive price, whether there is a nights cap of the Edinburgh kind, whether business travel is exempt, and how the revenue is split between a mayor and the councils in the area are all open. So is the question of enforcement: a percentage levy needs the accommodation provider to report its takings accurately, which is a bigger administrative lift for a two-room B&B than for a chain hotel.
The other unknown is the rate itself. A 5 per cent political pledge is not a legal cap, and a future mayor is not bound by a predecessor’s promise. The government’s language about “proportionate” rates suggests ministers expect to police excess through guidance rather than statute. For retailers, the safest assumption is that the first schemes land at or near 5 per cent in the big cities, lower in regions that are nervous about domestic visitors, and that the numbers drift upward over time unless there is a ceiling in the bill.
Frequently asked questions
Is there a tourist tax in England now?
Not a statutory one. Manchester and Liverpool charge a small flat fee per room per night through voluntary Accommodation Business Improvement Districts. The government confirmed on 10 September 2026 that English mayors will get the legal power to charge an Overnight Visitor Levy, but a bill has to pass first and the first charges are expected before the end of 2029.
How much will England’s tourist tax be?
The levy will be a percentage of the cost of accommodation, set by each mayor. The government has not imposed a maximum, but Labour regional mayors have pledged to stay at or below 5 per cent and Sadiq Khan has said London will not exceed that. At 5 per cent, a couple paying £120 a night for two nights would pay £12.
Who has to pay it?
Anyone staying overnight in commercial accommodation in an area that introduces the levy, regardless of nationality or reason for travel. Hotels, guesthouses, B&Bs and holiday lets are in scope. Campsites, temporary accommodation, shelters and refuges are exempt under the government’s announcement.
Who collects the levy?
The accommodation provider. The government says hotels and other providers will be responsible for paying the levy to the strategic authority or mayor, which means it will appear on the guest’s bill much as the Edinburgh levy does.
Can every council introduce it?
No. The power goes to mayors and to the leaders of Foundation Strategic Authorities. Areas outside a strategic authority cannot introduce a levy under this announcement, although the devolution programme is extending strategic authorities across more of England.
What will the money be spent on?
Mayors decide, in consultation with residents and businesses. The government lists high streets, public transport and tourism. Mayors and Foundation Strategic Authority leaders must set out spending plans by early 2028. Bira is pushing for a guarantee that money raised in a town is spent in that town; London Councils wants boroughs to keep at least half.
How does it compare with Scotland and Wales?
Edinburgh has charged 5 per cent of the accommodation cost, capped at five consecutive nights, since July 2026. Wales is introducing a flat charge of up to £1.30 per person per night from April 2027, council by council. England’s scheme is percentage-based like Edinburgh’s, with no statutory cap.
Will a tourist tax hurt independent shops?
Bira’s argument is that every pound paid in levy is a pound not spent on the high street, and that the two mayoral strategic plans published so far barely mention high streets. The West of England’s own figures show retail takes 33 per cent of visitor spending and food and drink 30 per cent, so shops have a large stake in how the money is reinvested. The direct cost per visitor is small; the risk is in shorter stays and spending diverted away from town centres.
When does the levy start?
Not before a bill passes Parliament, which the Commons Library says was promised for the 2026–27 session. Mayors then consult and design local schemes, with spending plans due by early 2028 and the first charges expected before the end of 2029.