The local government secretary announced a plan Thursday that would grant mayors across England authority to impose taxes on overnight holiday accommodations, including hotels and short-term rental properties like Airbnbs. The measure grants mayors significant autonomy over tax rates, with no cap on charges and limited oversight regarding revenue use, though Labour metro mayors have voluntarily agreed to limit rates to 5% initially. Regional leaders expressed support, noting the revenue would provide crucial funding as local governments face financial strain. Mayors are expected to present detailed implementation plans in early 2028.
The hospitality industry responded with strong opposition to the proposal. UKHospitality, the sector’s trade body, warned that a uniform 5% levy could eliminate 33,000 jobs and inflict £2 billion in economic losses, with tourism-dependent regions such as the Lake District facing disproportionate harm. The chief executive of Britain’s largest hotel chain, Premier Inn, characterized the measure as potentially catastrophic and urged the government to reconsider. Other industry representatives expressed frustration, arguing the tax represented an additional burden on businesses already struggling with elevated operational costs.
Local government officials defended the initiative as essential for supporting communities and public services. The measure aligns England with numerous European nations and American jurisdictions where visitor levies have operated successfully. Wales and Scotland have implemented comparable taxes, with Edinburgh setting its rate at 5% in July. Under the proposal, taxes would be calculated as a percentage of overnight stay costs rather than flat fees, with commercially rented properties subject to the levy, though occasional rentals may be exempt. Mayors would retain discretion regarding exemptions for sites such as festival campsites.
Not all regions will implement the tax. Mayors in parts of the east coast, including two Reform UK officials and one Conservative, declared they would decline to adopt the measure. The initiative represents one of the most substantial transfers of tax authority from the central Treasury to local leaders in recent years and follows government efforts to support the hospitality sector through reduced VAT on domestic holiday destinations and business rate cuts for venues including pubs and live music establishments.
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