Holidaymakers and business travelers in the UK could soon face a new tax on overnight stays, under plans revealed by the Labour Party. The proposed legislation would empower regional mayors to introduce an unlimited 'Overnight Visitor Levy,' which could be charged for up to a month on continuous stays. This levy would be a percentage of the accommodation cost, with Labour-run areas reportedly considering a 5 percent rate.
Owners of short-term rental properties, including Airbnbs and guest houses, would be subject to a £500 fine if they fail to maintain proper guest records. Local authorities would be granted HMRC-style powers to investigate tax compliance.
Ministers stated that the revenue generated from the levy could be reinvested in local amenities such as high streets, public spaces, and tourist attractions. However, there would be no legal obligation for this reinvestment.
London Mayor Sadiq Khan has expressed support for the tax, suggesting it would provide the capital with greater financial autonomy. Conversely, industry groups like UKHospitality have voiced strong opposition, warning that the tax would increase the cost of family holidays and could jeopardize jobs in the hospitality sector. They argue that the UK already has a high VAT rate on tourism and that this additional tax would make it less competitive.
Conservative lawmakers have also criticized the proposal, suggesting it would disproportionately affect individuals with limited financial means. Concerns have been raised about potential implications for non-commercial stays, such as Scout camps and Duke of Edinburgh expeditions, even when organized by volunteers.
This initiative follows similar, though less extensive, visitor levies already in place. Andy Burnham introduced the UK's first such tax in Greater Manchester in 2023, and Liverpool has a similar £2 rate. Edinburgh implemented a 5 percent charge capped at five nights, and Cardiff is set to introduce a £1.30 per night levy in April. The new government plans, however, would grant England's 14 regional mayors broader authority to implement an uncapped levy across their entire regions starting in 2028.