UK Chancellor of the Exchequer ready to grant London Mayor the authority to levy taxes on overnight stays
Tuesday, 25 Nov, 2025
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UK Chancellor of the Exchequer Rachel Reeves is preparing to give major English cities, including London, new powers to impose taxes on overnight stays in hotels, Airbnbs, and other short-term accommodations.
The measure, expected to be included in the upcoming English Devolution and Community Empowerment Bill, would let local leaders decide whether to introduce a flat nightly fee or a percentage-based levy on room rates.
England to lose its title of last region in Europe without tourist tax
A 5% surcharge, for example, could add around $12 per night to a $240 hotel stay. Supporters argue the policy could generate hundreds of millions of dollars to support transportation, tourism services, and strained local budgets.
England is currently unusual among developed countries in not applying a tourist tax. The government sees the change as part of a broader push to expand local fiscal autonomy.
However, hospitality groups and the tourism trade in general warn the levy could fuel higher prices and weaken competitiveness at a time when consumer costs are already climbing. Above all, the debate around a potential ‘London Tourist Tax’ has once again accelerated.
If implemented, guests would be charged a modest fee per night in hotels or short-term rentals such as Airbnbs, with early estimates suggesting the measure could raise as much as £250m ($328m) annually for the mayor to reinvest into the capital.
Looking at the consequences with Mark Bron, LetMeShowYouLondon agency
Let’s look at what Mark Brown, owner of LetMeShowYouLondon.com, a specialist operator offering private guided tours, thinks on what this development could mean for London’s visitor economy.
“As someone who works closely with thousands of international visitors each year, today’s reports certainly bring the conversation around a London tourist tax into much sharper reality.
“If the government does hand the Mayor the power to introduce an overnight levy, we need to consider very carefully both the benefits and the risks.
“On one hand, London welcomes more than 30 million visitors annually, placing huge pressure on transport, public facilities and world-class heritage sites. A dedicated revenue stream could provide vital investment in infrastructure, maintenance and the preservation of iconic landmarks such as Westminster Abbey or the Tower of London.
“Many of our clients are already familiar with similar taxes in cities like Barcelona, Amsterdam and Venice, so the concept itself wouldn’t come as a shock. If implemented fairly and transparently, the funds raised could genuinely enhance the visitor experience, from improved accessibility to shorter queues at major attractions.
“However, there are equally important concerns. London is already one of the world’s most expensive destinations, and adding further costs, even modest ones, risks deterring price-sensitive travelers, especially families. There would also be huge logistical challenges in ensuring thousands of hotels, B&Bs and Airbnb hosts apply the levy consistently.
“For businesses like ours, the biggest priority is that the tax doesn’t feel like a cash-grab. Visitors must see clear evidence that any contribution they make directly benefits the city they are here to enjoy. Transparent communication, careful implementation and ring-fencing the revenue for visitor-focused improvements will be absolutely essential.
“Ultimately, London’s global reputation rests on delivering exceptional, high-quality experiences. If a tourist tax helps achieve that, it could support the long-term health of the city’s tourism sector. But if handled poorly, it risks undermining it.”
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