The government announced plans to grant English mayors authority to impose taxes on tourist accommodations including hotels and short-term rentals, a move intended to provide local authorities with additional revenue during a funding crisis. The proposal, unveiled Thursday by Local Government Secretary Angela Rayner, would allow mayors to set tax rates without an upper limit and with minimal restrictions on fund allocation. Regional leaders expressed support for the initiative, viewing it as an essential revenue source for communities.
The hospitality sector responded with strong opposition to the announcement. Industry representatives including UKHospitality and major hotel operators warned that a 5% overnight levy could eliminate 33,000 jobs and reduce economic output by £2 billion. Business leaders argued the timing was particularly damaging given existing pressures from inflation, increased employment costs, and national insurance expenses. They had anticipated stricter government constraints on tax rates and spending requirements.
Government officials defended the proposal as necessary to support local services and attractions. Rayner stated the measure would enable mayors to reinvest funds according to regional priorities. Labour metro mayors responded by voluntarily agreeing to cap rates at 5%, citing international precedent from cities across Europe and North America that successfully maintain tourist levies. However, mayors representing the east coast from Reform UK and Conservative parties indicated they would not implement the tax.
The initiative aligns England with other parts of the United Kingdom and international jurisdictions with established visitor levies. Wales introduced similar charges beginning April 2027, while Scotland implemented its first tourist tax in Edinburgh at 5% in July. Under the English proposal, expected to be introduced in parliament within months, mayors will determine whether to apply the tax to specific accommodation types. Ministers will establish nighttime caps to prevent impacts on long-term rental properties. Mayors retain discretion to share revenues with local councils or exempt certain facilities such as festival campsites.
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