Government confirmed in its Autumn Budget that England’s regional and local mayors are set to receive a new tool in their kit: the power to charge tourists and visitors tax for staying overnight in their towns and cities.

This represents a step from Government towards their mission of devolving power and giving control to local leaders who know their own communities best, allowing them to decide for themselves where funding is best placed.

This intention to give regions greater autonomy and bring England in line with other major international cities such as New York, Paris and Milan where similar charges are commonplace, and have been broadly well-received.

The levy will apply to tourists visiting hotels, B&Bs, guesthouses, and holiday rentals/lets but what the specific cost itself would be to visitors is currently unknown and a point of contention for many.

The Ministry of Housing, Communities and Local Government described the levy as a “modest charge.” A 12-week consultation, ending on 18^th February 2026, is now underway which invites business, residents, and various tourism sectors to engage and be involved in how the levy would work in practice. They will consider if there needs to be a cap on the levy and this is a good way to fine tune the tourism tax before it is officially rolled out.

Who is exempt?

Emergency accommodation, homeless shelters and registered Gypsy and Traveller sites being used as primary residences would be exempt from this levy.

Mayors would also have the power to apply local exemptions where appropriate so they can tailor the levy to their local economy.

Flexibility is being given to mayors and local leaders to use the levy in a way that reflects the priorities of their regions and areas.

Why now?

The announcement to introduce the visitor tax came just a day before the Chancellor revealed the Autumn Budget on 26^th November 2025.

Government has said that tourism is a vital part of our economy and investment in the places that people visit will help to build on England’s reputation as a world leading destination.

Government wants to give Mayors powers to shape how a levy would apply in their region to ensure it is affordable and is invested in the most impactful way.

Until now, local councils have not had a specific tool to use which would allow them to create direct revenue from tourism.

At the end of 2024, Friends of The Lake District published a report called ‘Who pays for the Lake District?’. This report highlighted the "invisible burden" of tourism on the area's environment and infrastructure and is an example of why a levy is required to assist regions to reinvest in their communities where they feel best.

Comparably, Scotland and Wales will be bringing in their own tourist taxes next year with rates confirmed of £1.30 per night for hotels and 75p for hostels and campsites in Wales and 5% rate in Scotland.

The aim is for Mayors and local leaders to be able to capitalise on the already existing footfall, bearing in mind that England already attracts over 130 million overnight visits each year.

Who will have the power?

At present, Government has proposed that Mayors of Strategic Authorities in England will be given the power to raise revenue locally through the new visitor levy.

Government is also consulting on whether, and how, the power to raise visitor levy could be extended to local leaders in Foundation Strategic Authorities, who will not have a Mayor.

In its consultation, Government has said that it will not compel any Mayor to introduce the visitor levy, nor will Government reduce funding for Mayors if they decide to impose the visitor levy.

Government wants each Mayor to be able to choose what is right for their area and the merits of the overnight visitor levy may well be contested in future Mayoral election campaigns.

The final policy design choices will depend on what has been considered during the 12-week consultation. It will explore if the levies should be administered locally by relevant authorities, through a centralised approach, or instead, a combination of local and central authorities. The Government

Comparatively, the Visitor Levy (Scotland) Act 2024, gave the power to Scottish Local Authorities to impose a levy. Since then, the City of Edinburgh Council has adopted the levy and will apply it from 24^th July 2026 onwards.

How could funds be used?

The Secretary of State for Housing, Communities and Local Government has said, ahead of this week’s Autumn Budget, that the power to introduce a levy on overnight stays aims to empower mayors to “unlock growth through investment.”

Government believes the levy could help reshape the way local areas fund their own growth and put local leaders on equal footing with popular tourist destinations across the world.

This “modest change” could lead to big changes in local communities by carrying the potential to invest in much needed community improvements such as:

• Transport upgrades to services and links
• Improved infrastructure in popular tourist areas
• Better maintained and more attractive public spaces
• Enhanced cultural, entertainment, and sporting events
• Support for large events such as UEFA EURO 2028.
• Elevating historic sights

All this without requiring approval from Central Government and could mean a more stream-lined process and faster turnaround on community improvement.

A research report from the Greater London Authority in 2017 estimated that a 5%levy on accommodation costs could raise £239m per year in the capital so the potential for real change and improvement to local communities is not to be overlooked.

Government has said that “We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.”

What are regional leaders and mayors saying?

The Mayor of London, Sadiq Khan, and the Mayor of Liverpool City Region, Steve Rotheram, have voiced their support for this new mayoral power.

Sadiq Khan believes that “Giving Mayors the powers to raise a tourist levy is great news for London”

The Mayor of Greater Manchester, Andy Burnham has said that “The commitment to a new visitor levy will enable us to continue to support our thriving visitor economy and invest in the infrastructure to better support that growth, like later public transport, and making sure that everyone has a positive experience in Greater Manchester.”

The Mayor of West Yorkshire, Tracey Brabin has welcomed the introduction of the levy and has said “This will allow us to invest more into making our regions even better places to visit, unlocking opportunities and help our businesses thrive.”

The Mayor of York and North Yorkshire, David Skaith, added that “A small charge on overnight stays can revolutionise how we deliver transport, support businesses, invest in infrastructure and the visitor economy. Building the healthy and thriving communities for our residents and everyone that comes to visit them”.

Steve Rotherham shared similar views and has said that he is “…pleased that the government has listened and acted – giving areas like ours the powers we need to support and grow our economies in a sustainable way. Our visitor economy is worth more than £6billion a year and supports over 55,000 local jobs.”

Concerns around the visitor levy

Mayors across England have been vocal on this matter and whilst the response has been broadly in support of the levy, there has also been concerns from some Mayors and hospitality executives about the potential impact of the new levy.

Lord Houchen, the Tees Valley mayor, stated “Thanks, but no thanks.” He confirmed that he would not be using this new power and added, “There will be no tourist tax in Teesside, Darlington, and Hartlepool for as long as I’m mayor.”

Kate Nicholls, chairwoman of UKHospitality, warned the "damaging holiday tax" could cost the public up to £518m. She stated that "…this cost will be passed directly on to consumers, drive inflation and undermine the government's aim to reduce the cost of living."

It is not currently known how the levy would be collected and then spent.

Conclusion

To support devolution, Government wants to give Mayors power to raise and invest money into projects that improve their local areas, raise living standards and drive growth.

Government has said it will set out the framework for the power but it will be up to local leaders and local voters to decide what is right for their area.

However, there remains a high level of uncertainty around how the visitor levy will be charged, collected and administered.

Following the consultations, Government will work closely with Mayors and local leaders on the design of the levy to provide clarity.

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