Mayors and local leaders across England are set to receive new powers to introduce an Overnight Visitor Levy, allowing them to generate additional funding for local priorities such as high streets, public transport, public spaces and tourism infrastructure.
The policy forms part of the government's latest programme of fiscal devolution, designed to shift power away from Whitehall and place more decision-making in the hands of local communities. The announcement comes ahead of a Mayoral Council meeting at No10 North, where leaders will discuss how the new powers could support regional growth and investment.
Under the proposals, visitors staying overnight in hotels and other accommodation could be charged a levy based on a percentage of the cost of their stay. Ministers say this approach will help protect budget-conscious travellers and families by avoiding a flat-rate charge that could disproportionately affect lower-cost accommodation.
The reforms follow a government consultation conducted in 2025 and are intended to bring England into line with several international destinations where similar tourism taxes already operate, including cities and regions across Germany, Italy, the Netherlands, Canada and the United States.
Revenue generated through the levy would be reinvested directly into local communities, helping authorities improve visitor experiences, manage tourism pressures and support economic growth in destinations that attract millions of visitors each year.
Mayors and leaders of Foundation Strategic Authorities will have the discretion to decide whether to introduce a levy in their area and how any proceeds should be spent. They will be expected to consult local residents and businesses before making decisions.
The announcement is the latest stage in the government's wider devolution agenda, which has also included plans to allow mayors to retain a share of income tax revenue, play a greater role in planning decisions and establish strategic authorities throughout England.
Secretary of State for Housing, Communities and Local Government Angela Rayner, said:
“Our amazing towns and cities, and our picturesque rural and coastal communities welcome millions of visitors every year – local leaders should have the power to make the most of that popularity.
“This measure will give mayors the choice to raise and reinvest funding where it’s needed most. It’ll help support the local services, public spaces and attractions that both residents and visitors rely on, with decisions taken by people who know their area best.”
Local authorities will also be given flexibility to introduce exemptions where appropriate, including for campsites. Meanwhile, temporary accommodation, shelters and refuges will be excluded from the levy to ensure vulnerable individuals and families are not affected.
The move comes alongside wider support for the tourism and hospitality sector. The government highlighted measures including a 20% reduction in business rates for eligible venues, a tax break on poured pints, a Corporation Tax cap of 25%, and a review into how hotels and pubs are valued for business rates ahead of the next revaluation.
Ministers are also investing £3.38 million through VisitEngland's Connected Destinations Fund, aimed at improving visitor experiences and encouraging collaboration between destinations across England.
Hotels and accommodation providers will be responsible for collecting and paying the levy to strategic authorities. The government has pledged to work closely with the sector to ensure the system is straightforward and efficient to administer.
Legislation enabling the levy is expected to be introduced in due course, with mayors and Foundation Strategic Authorities expected to publish spending plans by early 2028. Alongside the new levy powers, Foundation Strategic Authorities will also gain responsibilities relating to transport, skills and local growth.
Mayor of the East Midlands, Claire Ward said:
“The East Midlands is an incredible place to visit, and people travel from miles away to enjoy the world-class sport and culture, beautiful countryside, thriving cities, market towns and historic places.
“But none of these things – whether it is the natural beauty of the Peak District, our heritage buildings, or world class hospitality – will continue to attract visitors and improve their offer if we do not invest into them. The overnight visitor levy is a way that we can sustain investment – year after year – in the places and experiences that people will return to.
“Having seen this work in other places around the world, I am confident that we can make it work here. But to ensure that happens, we will work with partners, businesses and stakeholders to understand what is right for our region, how a levy could be designed to match that, and how any money raised could have the greatest impact.”
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