London Expected to Gain Powers to Introduce Tourist Tax on Overnight Visitors
London appears poised to join other major global cities in charging a tourist levy on overnight stays, as the UK government prepares to grant new powers to local leaders. Mayor Sadiq Khan has previously pushed for such authority, and the proposal is expected to feature in the upcoming English Devolution and Community Empowerment Bill currently before Parliament.
Chancellor Rachel Reeves is anticipated to confirm the move, which could allow City Hall and London’s boroughs to implement a tax projected to generate as much as £240m annually. The capital recorded 89 million overnight stays in 2024.
England remains the only G7 nation where local authorities cannot impose tourist taxes. Scotland and Wales have already introduced their own versions, with Welsh councils set to charge visitors £1.30 per night from 2026.
How a London Levy Might Work
A recent briefing from the Centre for Cities, commissioned by the Greater London Authority, examined models used in cities such as New York, Paris, Milan, Toronto and Tokyo. These include percentage-based charges and fixed flat fees. Because the UK lacks a national hotel star-rating system, experts say London may be better suited to either a percentage or flat-rate model.
A previous GLA estimate suggested a £1-per-night fee could raise £91m, while a 5% charge might deliver £240m. The think tank also noted that London is unlikely to suffer a drop in visitor numbers if it adopts a levy in line with comparable cities, as demand for popular destinations tends to remain strong.
Centre for Cities chief executive Andrew Carter said a well-designed levy could bolster London’s economy and help fund infrastructure. He urged that any revenue be controlled by local government, split between City Hall and boroughs, rather than ring-fenced by central authorities.
Mixed Reactions From the Hospitality Industry
Not everyone supports the idea. Kate Nicholls, chair of UK Hospitality, described the proposal as “shocking,” arguing that it would place a financial burden on domestic visitors, workers, and families taking short breaks. She warned that the sector already faces high VAT rates, saying the levy could deter travellers and hurt jobs and investment.
Boroughs Signal Support
Some local councils have long campaigned for the power to introduce a tourist tax. Westminster Council leader Adam Hug said a levy would help balance the costs created by the borough’s large daytime population, which far exceeds the number of residents contributing to council tax. Other boroughs, including Southwark and Brent, have also backed the idea.
City Hall’s Stance and What Comes Next
The mayor’s office welcomed the prospect of new powers but said it would not comment further until details are confirmed. A spokesperson reiterated that a small levy – similar to those in other international cities – could strengthen London’s status as a global tourism and business hub.
While the government has yet to formalise the plan, the Ministry of Housing, Communities and Local Government said it remains open to discussions. Some boroughs, such as Richmond, are already exploring local alternatives through the Accommodation Business Improvement District (ABID) model, though these could be replaced if a city-wide levy is introduced.
A formal announcement is expected in the coming months.
