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UK: Regional mayors could receive powers to introduce an uncapped levy on hotel, holiday rental and Airbnb-style stays under legislation expected to be brought before parliament within months.
The UK government is reportedly moving ahead with plans to allow regional mayors in England to introduce local visitor levies on overnight accommodation.
The proposed powers would cover short-term rentals, hotels and other forms of overnight accommodation, with mayors able to decide whether a levy should be introduced in their region and how it should operate.
The legislation is expected to be introduced as a bill within months, following a government consultation launched in November 2025.
The latest plans suggest that there would be no national cap on the amount mayors could charge. This marks an important development since the consultation, which considered whether limits should be placed on local levies.
However, the government is not expected to bring the powers into effect immediately. Local leaders are expected to be able to outline how levy revenues would be invested by March 2028.
Housing secretary Angela Rayner reportedly presented further details of the plans to England’s regional mayors during a meeting in Manchester on Thursday.
London is understood to favour a levy calculated as a percentage of accommodation costs rather than a fixed nightly charge. Sources from the mayor’s office said that no decision had been made on the final structure, although any levy introduced in the capital would not exceed five per cent.
Revenue raised through the measures would remain within the region and could be used to support transport, tourism infrastructure, cultural attractions and other local services.
Industry bodies have renewed their opposition to the proposals, warning that an open-ended local levy could increase the cost of domestic holidays and place further pressure on accommodation businesses.
UKHospitality estimates that a five per cent levy applied across England could result in 33,000 job losses and reduce economic activity by £2 billion. The organisation also warned that tourism-dependent destinations and businesses operating during quieter shoulder seasons could be particularly exposed.
Allen Simpson, chief executive of UKHospitality, said holidays in the UK were already comparatively expensive due to existing taxes and warned that allowing mayors to set rates without a national limit could affect demand.
The plans build on proposals announced in November 2025, when the government opened a 12-week consultation examining how local visitor levies should operate, who should collect them and whether charges should be capped.
At the time, holiday rental businesses warned STRz that different approaches between neighbouring regions could distort demand and create further uncertainty for property managers and owners.
Visitor levy schemes are already being introduced elsewhere in the UK. Edinburgh began applying a five per cent charge in July, while councils in Wales will be able to charge most overnight visitors £1.30 per person from April 2027.
The England proposals must still pass through parliament before mayors receive the new powers.
Highlights:
- England is expected to introduce legislation granting regional mayors visitor levy powers.
- Charges could apply to short-term rentals, hotels and other overnight accommodation.
- The proposed powers would not include a national cap on levy rates.
- Local leaders are expected to outline investment plans by March 2028.
- UKHospitality estimates that a five per cent levy could cost 33,000 jobs and reduce economic activity by £2 billion.
- Individual mayors would decide whether to introduce a levy within their region.
