A new Bill would allow mayors and other strategic authorities in England to impose a percentage-based tax on overnight accommodation, but the proposed legislation does not set a national maximum rate.
The Visitor Levy (England) Bill was introduced in the House of Commons on 4 November 2026. The government says money raised would stay in the local area and could support transport, regeneration, high streets, public spaces and cultural attractions. It is not yet law, and no new nationwide levy has been imposed.
How would the visitor levy work?
If the Bill becomes law, individual strategic authorities would decide whether to introduce a levy after consulting local people and businesses. The charge would be calculated as a percentage of the accommodation price rather than a flat amount per night, with hotels and other accommodation providers legally responsible for accounting for and paying it.
The proposed rules could cover paid stays in hotels, guesthouses, bed and breakfasts, holiday lets, campsites and other short-term accommodation. The Bill can also cover pitches for tents or caravans and certain permanently sited vehicles or vessels. It does not impose a charge on day visits.
As an illustration, a 5% levy on £100 of chargeable accommodation value would amount to £5. This is not a confirmed rate for any destination. The Bill uses the accommodation value excluding VAT when calculating the levy, and the final cost to customers would depend on local pricing and tax treatment.
Does the Bill cap the tax at 5%?
No statutory 5% cap appears in the Bill as introduced. Section 3 lets each levying authority specify its percentage rate in a final visitor levy prospectus. The government announcement says ten mayors have voluntarily committed to keeping their rates at or below 5%, but a political commitment is not the same as a binding national limit.
The government argues that a percentage-based charge would help protect cheaper accommodation from the disproportionate effect of a fixed fee. Critics say the extra cost could still affect families and people travelling within England for work or personal reasons.
Who would be exempt?
The proposed legislation includes exclusions for categories such as institutional student accommodation, care homes, children’s homes, school boarding houses and authorised Gypsy and Traveller sites. The government says temporary accommodation, shelters and refuges would also fall outside the charge.
Special rules exclude longer-term occupation, including stays extending beyond 28 successive days. A threshold is also proposed for smaller accommodation providers, including occasional hosts, but the monetary threshold would require further regulations or local decisions. Authorities could introduce certain additional local exemptions where permitted, potentially including camping pitches.
Where would the money be spent?
Ministers say the proceeds would remain within the collecting area. Angela Rayner, the communities secretary, said: “Every pound raised through these levies will stay in the local area.” Suggested uses include cleaner streets, public toilets, parks, transport, cultural events and other projects benefiting residents and visitors.
However, the Bill does not require the proceeds to be spent exclusively on tourism or hospitality. Its provisions refer to the wider powers of strategic authorities, including local infrastructure, economic development, public safety, culture and coastal or rural priorities. Authorities would have to publish spending proposals and annual reports, but the exact allocation would be a local decision.
The government points to Greater Manchester’s existing, separate hotel-sector Business Improvement District charge, which collected £2.8 million in its first year after its introduction in 2023. That £1-per-room scheme is not the same legal levy as the one proposed in this Bill.
Hospitality industry warns of higher costs and job losses
UKHospitality has criticised the lack of a statutory rate cap and the absence of a requirement to reserve all revenue for tourism. It argues that visitors paying for domestic holidays, work-related stays or family trips could face additional costs.
The trade body cites modelling by Oxford Economics which estimates that, if a 5% levy were fully in effect by 2030, it could be associated with 33,000 fewer jobs, £1.6 billion in extra taxes for holidaymakers and £688 million less in Treasury receipts. Those figures are forecasts based on modelling assumptions, not job losses or tax effects that have already occurred.
Supporters of the levy argue that revenue reinvested in local places could improve visitor experiences and help tourism-dependent communities. The actual economic impact will depend on which authorities adopt a charge, the rates they choose and how the income is used.
What happens next?
The Bill must pass the parliamentary process and receive Royal Assent before the new powers can be used. It was at the first-reading stage on 4 November, with no confirmed date in the Bill for local levies to begin.
Before introducing a charge, an authority would have to publish a draft prospectus and impact assessment, consult relevant parties, consider their responses and follow the required local approval process. The final prospectus would specify the rate, thresholds, applicable exemptions and commencement date.
The immediate position is therefore straightforward: England has a proposal for locally chosen overnight visitor levies, not a universal tourist tax already in operation.
Sources
- UK Parliament: Visitor Levy (England) Bill, Bill 177 as introduced, 4 November 2026
- UK Parliament: Bill stages and documents
- Ministry of Housing, Communities and Local Government: visitor levy announcement, 4 November 2026
- UKHospitality: industry response and Oxford Economics figures, 4 November 2026
