England is a step closer to its first tourist tax. The Visitor Levy (England) Bill, introduced in the House of Commons on 4 November, returns for its second reading on Monday 16 November. It would let mayors add a visitor levy, charged as a percentage, to the price of hotel rooms, B&Bs, campsites and short-term lets such as Airbnb, and nothing in it limits how high that percentage can go.
That missing cap is now the centre of the argument. Ministers present the visitor levy as a local choice that keeps money in the places tourists visit. The hospitality trade calls it an uncapped holiday tax that will cost jobs. Here is what the bill actually says, who would pay, and how soon a charge could reach a booking.
What the Visitor Levy Bill Would Let Mayors Do
The bill is sponsored by Angela Rayner, the Secretary of State for Housing, Communities and Local Government, and runs to 21 clauses and four schedules. Its first clause gives England’s strategic authorities, a group that includes the mayoral combined authorities and the Greater London Authority, the power to impose a visitor levy on “qualifying stays in local visitor accommodation in its area”, as the House of Commons Library briefing published on 12 November sets out. Some councils designated as foundation strategic authorities would get the same power.
Today no English council or mayor can charge a visitor levy at all. The only workaround has been tourism business improvement districts, such as the accommodation schemes in Manchester and Liverpool, where businesses voted to pay a levy themselves. Scotland and Wales have already legislated for their councils, and Edinburgh has charged a levy since July.
The English version would be a percentage of the accommodation price, never a flat fee. In its announcement on 4 November, the government argued that this protects cheaper family breaks, because a lower room rate means a lower levy. A mayor would also have to set one rate for every type of accommodation across the whole area: no seasonal rates, no higher rate for luxury hotels, and no levy in one town but not the next.
Why There Is No Cap in the Law
On the rate, the Library briefing is blunt: “The bill does not provide for any cap on the visitor levy rate that a levying authority may set.” The only limit so far is political. Ten Labour mayors said in September that any levy in their areas would be no higher than 5%, and the government repeated that commitment when it introduced the bill. The promise is voluntary, and it binds no future mayor.
The Tourism Alliance has asked ministers for a statutory cap, the briefing records. It also quotes Jon Hendry Pickup, chief executive of Butlin’s, telling the trade magazine The Caterer that without one the levy “risks creating unfair differences for working families taking holidays in the UK.”
Scotland offers a guide to where rates may settle without a ceiling. Its law sets no cap either. Edinburgh charges 5%, Glasgow and West Dunbartonshire will charge 5% when their schemes start in 2027, Stirling will charge 3% and Aberdeen 7%.
Who Would Pay, and on Which Stays
The government’s plans, set out in its consultation and the response published on 10 September, reach almost every kind of paid bed. The levy would apply to hotels, guesthouses, B&Bs, hostels, campsites, self-catering properties and short-term lets, including stays booked through online platforms such as Airbnb. University and religious accommodation would be covered when it is let commercially.
Some stays sit outside it. Care homes and moving vehicles are not covered, and traveller sites, temporary accommodation and non-profit shelter, respite or refuge are exempt. Staying with friends or family never counts. Mayors could also choose to exempt tent pitches, touring caravan pitches and dormitory-style hostels after local consultation.
The levy would apply to up to 28 consecutive nights of a stay. That is far longer than in Edinburgh, which charges only the first five nights, and the bill gives English mayors no power to set a shorter limit. A national threshold would keep occasional, informal hosts out of the system, and regulations could allow mayors to set a higher threshold, but never a lower one.
Tax would stack on tax. The percentage is worked out on the room price before VAT, but where a provider is VAT-registered, VAT is then charged on the whole bill, levy included. Accommodation in the UK already carries the standard 20% rate, and HMRC has estimated that cutting VAT on accommodation and food services to 5% would cost around £17 billion in 2026-27.
How a Mayor Would Switch the Levy On
A mayor would first publish a draft prospectus setting out the rate, any local exemptions, the start date, an impact assessment and how the money would be spent, then run a public consultation. Members of a mayoral combined authority would vote on the final proposal within 10 days, but under the bill they cannot veto it. If they do not approve it, they can only report back with reasons and recommendations, which the mayor must answer before going ahead. The London Assembly plays the same role for the Mayor of London.
Non-mayoral combined authorities, such as Devon and Torbay, would need a unanimous vote of all their members. A levy could only start on 1 January, 1 April, 1 July or 1 October, and never retrospectively. Unlike Scotland, which requires 18 months between a decision and a levy, and Wales, which requires 12, the bill sets no minimum lead-in period. The government has said English authorities are likely to be able to use the power from April 2028 if the bill passes.
The money would not be ringfenced for tourism. It must be spent within the strategic authorities’ areas of competence, a list that runs from transport and regeneration to culture, housing, skills and health, and mayors would have to report each year on what they collect and how they spend it.
The Money at Stake, From £600 Million to £1.6 Billion
Estimates swing with the assumptions behind them. Tax Policy Associates calculated that a 5% visitor levy across England would raise roughly £600 million a year, with £379 million coming from British tourists and £224 million from overseas visitors. Oxford Economics, modelling for the trade body UKHospitality, put the revenue from a 5% levy at £1.6 billion, against £688 million of lost tax from reduced activity, 11.9 million fewer nights in paid accommodation and 33,000 lost jobs by 2030.
Mayors have offered local figures of their own. Steve Rotheram, Mayor of the Liverpool City Region, said in the government’s announcement that a modest levy “could potentially raise up to £18m a year”. David Skaith, Mayor of York and North Yorkshire, said the county welcomes more than 40 million visitors a year and confirmed he will introduce a levy there. North of the border, Edinburgh’s council expects its levy to raise £45 million to £50 million a year by 2028/29.
Paris is the cautionary tale the industry keeps citing. Evidence gathered by the All Party Parliamentary Group on Hospitality, and quoted in the Library briefing, notes that the French capital’s original estimate of €200 million turned out to be four times the roughly €50 million collected in the first year.
What Ministers and the Hotel Trade Are Saying
Rayner framed the bill as local choice. “Every pound raised through these levies will stay in the local area,” she said in the government’s announcement. Sadiq Khan, the Mayor of London, was just as warm: “After years of lobbying, I wholeheartedly welcome this Bill,” he said, arguing it would give the capital more freedom to raise and invest money locally.
The trade’s response arrived the same day. Allen Simpson, chief executive of UKHospitality, said in a statement that it was “genuinely shocking” to see the legislation, and that mayors “will be able to introduce an uncapped holiday tax on Brits and then spend the funds on whatever they like”. Polling of 10,005 adults commissioned by UKHospitality found 56% opposed the levy and 24% supported it.
Heritage groups want the money tied to the places visitors come to see. “Ring-fencing is essential,” the Heritage Alliance said in its consultation submission, which the Library briefing reproduces. Business travel bodies have warned that conferences, which can fill hundreds of rooms at once, would feel the charge most.
Second Reading and the Prison-Sentence Row
Monday’s debate is the first chance for MPs to vote on the principle of the bill. Because the levy is meant to be raised and kept locally, the bill needs no money resolution, and the House of Lords keeps full powers to amend or reject it.
One detail has already made headlines. The bill creates a criminal offence of fraudulently evading the levy, which on conviction at the Crown Court could carry a prison sentence of up to 14 years, alongside a fixed £500 penalty for lesser failures such as not keeping records. The housing ministry published a blog on 5 November titled “Misleading reporting on the Overnight Visitor Levy”, and the Library notes that the longest sentences would only be available in a fraud case sent to the Crown Court.
For travellers, nothing changes yet. Even on the government’s own timetable, no English visitor levy is expected before April 2028, and every mayor who wants one would still have to publish a prospectus and consult first. Prices are already a running theme this autumn: inflation came up 820 times on S&P 500 earnings calls in October. Whether a tourist tax joins them in England now depends on how MPs, and then peers, treat the cap that is not in the bill.
