Mayors and strategic authorities across England could gain powers to introduce charges on overnight accommodation under legislation intended to provide additional local funding for tourism, infrastructure, and town-centre improvements.
The Visitor Levy Bill would allow participating authorities to collect a percentage of the price of overnight stays and reinvest the proceeds within their areas.
The proposed system would apply to hotels and other qualifying accommodation providers, introducing new collection, accounting, and reporting obligations where a local authority chooses to establish a levy.
The Ministry of Housing, Communities and Local Government has proposed a locally administered framework, requiring mayors and strategic authority leaders to consult businesses and residents before introducing a charge.
Ten mayors have committed that any levy introduced in their areas would not exceed 5% of accommodation costs. That pledge is separate from a nationwide statutory maximum, with individual authorities retaining responsibility for deciding whether to introduce a levy.
The percentage-based approach means visitors staying in lower-priced accommodation would pay a smaller amount in cash terms than those booking more expensive rooms.
Unlike a fixed nightly charge, the levy would increase in line with the accommodation price, making its financial effect dependent on the value of the booking.
Accommodation providers would be responsible for accounting for and paying the levy. The government intends to provide guidance explaining registration, payment, and reporting requirements.
Authorities would have powers to enforce compliance, although ministers have said those powers should be exercised proportionately.
The charge would apply only to the first 28 consecutive days of a stay, reflecting the distinction between short-term accommodation and longer-term residence.
National exemptions would cover student accommodation, care homes, children’s homes, school boarding houses, temporary accommodation, shelters, and refuges.
Local authorities would also have limited discretion to introduce further exemptions, potentially including certain low-cost accommodation arrangements such as camping pitches.
Occasional hosts renting spare rooms or other accommodation would be protected by an earnings threshold, below which the levy would not apply. Local leaders could adjust the threshold to reflect conditions in their visitor markets.
Before introducing a scheme, an authority would need to publish a draft plan and impact assessment covering the proposed rate, exemptions, thresholds, expected economic effects, and intended use of the revenue.
Businesses and residents would then have an opportunity to respond through consultation. Authorities would be required to consider those representations, obtain the necessary internal approval, and publish final documentation before proceeding.
In foundation strategic authorities, unanimous agreement would be required before a levy could take effect.
Authorities operating a scheme would also need to publish annual reports setting out the amount collected, how the proceeds had been spent, and future expenditure plans.
Revenue could support public transport, high streets, public spaces, cultural attractions, security, and destination promotion, with spending priorities determined locally.
Greater Manchester already operates a separate visitor accommodation charge through a Business Improvement District arrangement introduced in 2023.
That scheme charges £1 per room per night and raised £2.8m in its first year, with proceeds supporting measures including additional street cleaning.
The Visitor Levy Bill would establish a different statutory mechanism available more widely across England. It would not introduce an automatic nationwide accommodation charge.
The eventual financial and administrative consequences for hospitality businesses would depend on the rates, exemptions, and reporting arrangements adopted by individual authorities.
The Bill remains subject to parliamentary approval. Only after the proposed powers become law and local consultation requirements are satisfied could participating authorities introduce the new levies.
