Budget lets England's 20 strategic authorities levy a charge on overnight stays from 2028

Mixed · 2In the first Budget of Prime Minister Andy Burnham's government, Chancellor John Healey announced that "from 2028, mayors and other strategic authorities will have new powers to introduce an overnight visitors levy". 1 2 Mixed · 2The power could apply in all 20 of England's strategic authorities, 14 of which have a directly elected mayor, including Greater London, Greater Manchester, Liverpool City Region, York and North Yorkshire, and Devon and Torbay. 1 2 Mixed · 2The levy would be charged as a percentage of the bill for hotels, bed and breakfasts and other accommodation, rather than a flat fee. Local leaders could offer exemptions, such as for campsites, and temporary accommodation, shelters and refuges would not be included. 1 2

Mixed · 2Local leaders would set the rate, which has no upper limit in law, but it is understood that Labour's metro mayors have agreed it will not exceed five per cent. Revenue would go to local areas rather than the Treasury, for services, transport and promoting culture and tourism. 1 2 Mixed · 2Healey said the levy would sit alongside the transfer of business rates and income tax receipts to mayors, so that "more of the money that is raised locally can be invested and spent locally". 1 2 Mixed · 2Similar charges already exist. Manchester introduced a £1 per room, per night fee through its Accommodation Business Improvement District in April 2023, raising around £2.8m in its first year, and Liverpool followed a similar model. Edinburgh introduced a five per cent levy this summer for the first five nights of a stay. 1 2

Mixed · 2London has not yet decided how its scheme would work. Analysis earlier this year suggested a three per cent charge on overnight visitors to the capital could raise more than £350m a year, and Liverpool City Region Mayor Steve Rotheram said a modest levy could raise £18m a year there. 1 2 Mixed · 2Industry groups oppose the move. UKHospitality said estimates suggest it could cost 33,000 jobs and increase tax for holidaymakers by £1.6 billion. Butlin's boss Jon Hendry-Pickup called it "a tax on UK holidaymakers" and warned of red tape from differing local levies, and business travel leaders argue that people travelling for work should be exempt. 1 2 Mixed · 2Downing Street has insisted the "overwhelming majority" of hospitality firms would not be directly affected because the charge applies only to overnight stays and would be at mayors' discretion. The Local Government Association has warned that councils in England face a £7 billion funding gap within three years. 1 2