Don’t Sleep On The Overnight Visitor Levy The Recent King’s Speech Has Confirmed The Government’s Intention To Legislate For An Overnight Visitor Levy (The Levy). This Follows The... Article 9 July 2026

The recent King’s Speech has confirmed the Government’s intention to legislate for an overnight visitor levy (the levy). This follows the announcement in the Autumn Budget 2025 that a new “tourist tax” would be introduced for overnight stays in England and a consultation issued in November 2025.

How will the levy be legislated for?

The Overnight Visitor Levy Bill will set out a framework for the levy including the “broad conditions” for its introduction and details of its structure. A 12-week consultation on the proposals for an overnight levy ran until February 2026. The outcome of that consultation is awaited and will inform the drafting of the legislation.

The impact on the timing of this (if any), of the change in Prime Minister is unknown, however as a devolved power, it is expected to ‘fit’ with the pro-devolution approach announced in Andy Burnham’s speech at the People's History Museum in Manchester on 29 June 2026.

Why is this levy being introduced?

The levy is intended to build on the devolution and regional growth provisions within the English Devolution and Community Empowerment Act 2026. Its aim is to enable mayors to “raise and invest money into projects that improve their areas” and it is intended that this additional investment will unlock growth, raise living standards and “make places more attractive for residents, businesses and visitors.” Proponents of the Bill believe that the levy will assist with attracting greater private investment and empower Mayors to make longer-term strategic investment decisions.

A number of European and international cities (for example Milan, Prague and Paris) already have visitor levies or powers to raise a visitor tax. The Kings Speech notes that “all other G7 countries already have some form of tourism or overnight accommodation levy in place. Some of these are well established - France has had an equivalent levy in place since 1910. Others are more recent: Norway, for example, is introducing their visitor contribution from summer 2026. Cities such as New York, Amsterdam, and Rome apply overnight charges to fund local services.”

What will the levy be used for?

In addition to local area improvement projects, revenue raised from the levy can also be spent to support existing and new sporting and cultural events (such as concerts and exhibitions), investment in training and skills development (including for those in the hospitality sector) and to improve transport accessibility.

Is the levy mandatory?

The power to introduce the levy will be discretionary; mayors will not be compelled to introduce a levy in their area. The Government recognises that “a visitor levy on overnight stays will not necessarily be the right lever everywhere.”

What types of accommodation will be impacted?

The levy is expected to affect all types of commercially let short-term accommodation used by business and leisure users. This would include hotels, serviced apartments, aparthotels, campsites (including glamping, pods and yurts), holiday lets (we assume this will also encompass Airbnb-style arrangements), hostels, guest houses, self-catering properties, and bed and breakfasts. The levy will apply to such accommodation regardless of size, price, frequency of letting, or booking method. However, it will be possible for local leaders to determine exemptions or reliefs for certain accommodation types in their local areas.

The levy will extend to less usual arrangements such as university halls or student accommodation let commercially outside of term-time and accommodation in a vehicle, or on board a vessel, which is permanently or predominantly situated in one place.

The Government has consulted on whether a de minimis threshold would be appropriate given that the administrative burden on smaller providers of accommodation may be disproportionate. That threshold may relate to letting accommodation for a minimum number of nights per year, very low-cost accommodation or providers that generate “very limited” turnover.

It is expected that a set of exemptions will be formulated based on accommodation type rather than characteristics of visitors. It is possible that exemptions might also be permitted at local level, for example where there is a “clear economic or social rationale.”

How will the rate of the levy be determined?

It is expected that visitors will be asked to pay a fee on overnight stays. The Government is considering the following options for setting the rate:

• percentage of accommodation cost (the Government’s preferred model); or

• a flat rate charge, either per person, per night; or per room, per night.

There are complexities with each option. For example, calculating a percentage of accommodation cost may be more difficult for “package deal” arrangements, or where dynamic pricing is in operation. A flat rate charge does not differentiate between budget and luxury.

As part of the consultation, the Government has sought views on whether a national cap would be appropriate both in relation to the overall levy rate and on the maximum number of consecutive nights to which the levy would apply.

Will there be different levy rates?

If mayors are given discretion to set the specific chargeable rate for their area, it may give rise to disparity across the country. The proposed framework anticipates this. Mayors may also be able to set different rates for different types of accommodation. For example, in areas of housing demand a higher rate could be applied to short-term lets.

In Scotland, under the Visitor Levy (Scotland) Act 2024, local authorities have discretion regarding where the levy applies and the rate of the levy.¹ For example, a flat 5% hotel tax has been introduced in Edinburgh. In Wales, local councils have a similar discretionary power, however they must consult before introducing a levy in a particular area and levy charges can only be commenced on 1 April or 1 October each year.²

Who will pay the levy?

A “self-assessment” model has been proposed. The accommodation provider will be legally liable for calculating the amount due and making payment. The point of tax will be the date of arrival, however, the Government is keen to minimize the administrative burden and anticipates that the levy will be collected at point of booking or check-in through integration with providers’ existing systems. This will carry an initial set-up and ongoing maintenance cost for providers. The legal compliance obligation will remain with the provider even where third party booking agents are involved.

The Government believes that, based on evidence from other countries, “modest levies have limited impact on visitor numbers” and the expectation is for most costs to be “passed through to visitors rather than absorbed by businesses.” Providers will be able to choose whether to pass on levy costs to visitors as part of accommodation price. Any VAT payable will be due on the total cost to the visitor, including the levy.

It is possible that accommodation providers will be required to follow a registration process to assist with administration of the levy.

Potential impact

• Government has acknowledged concerns raised by hotel groups and corporate operators regarding “potential complexity and cumulative burden of local levies, particularly if approaches vary across mayoral areas.” The Government intends to engage with major industry stakeholders to “understand and support their operational challenges, investment priorities, and deliverables.”
• Industry responses to the proposals consider the levy to be another tax on “family holidays, business travel and international tourism” which will impact both inbound tourism but also domestic holidays.³
• A House of Commons briefing paper included initial estimates of likely revenue from a visitor levy but warned that those figures should be “treated with caution before further details of the levy are known.” The figures included £91m p/a in London based on a £1 per night levy, “£11m for Liverpool City Region, between £8m - £40m in Greater Manchester and £52m for York and North Yorkshire.⁴
• The hospitality industry is weathering a number of recent changes, including the effect of increases to national living wage and national minimum wage. The levy will add to the regulatory and legal challenges facing the sector.

We will be keeping an eye out for the outcome of the consultation to further assess the likely impact on the hotel investment and operating market in the UK.

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