London Set to Introduce New Tourist Tax on Overnight Stays
UK Plans New Levy for Visitors Staying in London
The UK government plans to allow London and other English cities to introduce a tourist tax on overnight stays starting next year. Chancellor Rachel Reeves expects to grant mayors the authority to charge visitors staying in hotels, Airbnbs, campsites, caravan parks and bed and breakfasts.
The new levy will sit on top of the existing £16 Electronic Travel Authorisation fee required for visiting the United Kingdom. London recorded 89 million overnight stays in 2024, placing significant pressure on public spaces, transport systems and essential council services.
The new English Devolution and Community Empowerment Bill aims to give cities additional revenue-raising powers to manage rising tourism costs.
London Mayor Supports New Funding Powers for Tourism Management
London Mayor Sadiq Khan has consistently pushed for the power to introduce a levy supporting tourism infrastructure and cultural development initiatives across the city. Officials estimate that a modest overnight tax could raise up to £240 million annually for reinvestment in tourism-related projects and essential city upgrades.
Khan argues that Londoners currently subsidise visitor activity and that a levy ensures tourists contribute fairly to maintaining the capital’s attractions. He wants revenue spent on improving public spaces, enhancing transport links and protecting heritage sites used heavily by international visitors.
He believes the levy will support London’s ambition to remain the world’s top destination while reducing the impacts of excessive visitor pressure.
Concerns Grow Within the Hospitality Sector
Industry groups warn that the new levy could raise hotel prices during a period of intense financial pressure for tourism operators nationwide. UK Hospitality says hotels face rising business costs already, and an additional fee could discourage both domestic and international travellers.
They fear the levy will drive price-sensitive travellers to cheaper cities, particularly as other destinations with levies offer much lower VAT rates. Industry leaders warn that the added costs will push many travellers to consider more affordable destinations offering stronger overall travel value.
They argue that governments worldwide increasingly target tourists with taxes, reducing visitor spending and weakening support for small travel businesses.
Implementation Timeline and Global Comparisons
London expects to begin consultation during spring next year before formally deciding how and when to introduce its new tourism levy. Other English cities such as Manchester, Birmingham and Liverpool are expected to follow soon after London completes its public consultation process.
Countries including France, Italy, Japan, Greece, Portugal and the Netherlands already operate visitor levies across a wide range of accommodation types. Many major cities, including New York, Toronto, Tokyo and Barcelona, raise substantial revenue from overnight visitor taxes supporting local governments.
Analysis suggests London is unlikely to face a major drop in tourism because travellers show low price sensitivity when visiting iconic cities.
Potential Benefits for London’s Long-Term Tourism Strategy
Experts at the Centre for Cities believe the levy could strengthen London’s infrastructure and boost economic resilience across key visitor districts. They say giving mayors control over rates allows cities to adjust taxes quickly in response to evolving tourism patterns and major global events.
Westminster Council strongly supports the levy because local taxpayers currently subsidise services required for millions of annual visitors. They argue that additional revenue will help councils maintain public spaces, support cultural venues and manage essential services for residents.
Officials believe a well-designed levy could significantly support long-term tourism growth without deterring visitors from choosing London.
Next Steps for the Proposed Tourist Levy
The government has not yet finalised the plan, but the chancellor is widely expected to confirm the proposal in upcoming announcements. Local authorities can already introduce limited charges through the Accommodation Business Improvement District model if strong business support exists.
Richmond Council is reviewing an ABID scheme, which may be replaced if a London-wide levy becomes authorised through national legislation. The mayor’s office says a modest levy mirrors global practice and will reinforce London’s status as a premier tourism and business destination.
Travellers should expect further details in the coming months as legislation progresses and cities begin formal consultation procedures.