New Tourist Tax Powers for English City Mayors
The UK Government has announced it will grant new powers to local mayors, allowing them to introduce a tourist tax on visitors staying overnight in their cities. This move, confirmed on November 25, 2025, will enable city leaders to place a "modest charge" on accommodation in hotels, bed and breakfasts, guest houses, and holiday lets.
Funding Local Projects and the Hospitality Backlash
The revenue generated from this overnight stay charge is intended to fund vital local projects such as transport networks and infrastructure improvements. The policy has been welcomed by prominent figures including Greater Manchester's Mayor, Andy Burnham, and the Mayor of London, Sir Sadiq Khan.
Sir Sadiq Khan stated that the power to raise a tourist levy is "great news for London," highlighting its potential to support the city's economy and bolster its status as a top global destination. Andy Burnham emphasised that the nearly two million annual visitors to Greater Manchester contribute approximately £9 billion to the local economy, supporting over 100,000 jobs. He said the levy would allow investment in cleaner streets and enhanced public transport, such as later-running buses and trams.
However, the announcement has faced strong opposition from the hospitality sector. Kate Nicholls, Chief Executive of UKHospitality, condemned the move as a "damaging holiday tax" and a "shocking U-turn." She warned that the cost would inevitably be passed on to consumers, potentially adding up to £518 million in additional tax for UK holidays and effectively raising the VAT rate for tourists to 27%. She argued this would make the UK one of the highest-taxed destinations in Europe, driving inflation and undermining efforts to reduce the cost of living.
Next Steps and Public Consultation
The government's decision comes as Chancellor Rachel Reeves prepares to deliver her Budget. Steve Reed, the Local Government Secretary, said the measure would allow mayors to harness the economic power of tourism and invest more in local priorities.
A public consultation on the specific details of the tourist tax measure is now open and will run until February 18.
