Ministers introduced the Visitor Levy Bill in the House of Commons on 4 November, creating a power for mayors and strategic authorities in England to add a percentage charge to overnight accommodation bills and to keep the proceeds in their own area. The bill has only just been introduced. No levy is in force, and no rate has been set in legislation.
Under the proposed scheme a levy would have to be a percentage of the accommodation cost rather than a flat fee, so that a cheaper stay attracts a smaller charge than an expensive one. It would apply only to the first 28 consecutive days of a stay, which puts longer bookings largely outside its reach.
No national cap is written into the bill. Ten mayors have committed that any levy in their areas would be no higher than 5 per cent, a pledge made by those office holders rather than a ceiling fixed in the legislation. An authority that has not signed up to the pledge would not be bound by it.
The power would be available in England only, and the money would stay with the authority that raises it rather than passing through the Exchequer. A levy would fall on overnight accommodation, not on meals, day visits or other spending by tourists.
Exemptions and consultation
National exemptions would cover student accommodation, care homes, children’s homes and school boarding houses, which keeps the charge away from premises whose residents are not visitors in the ordinary sense.
An authority wanting to use the power would first have to publish a draft plan and an impact assessment and consult local businesses. That sequence is written into the proposal rather than left to local discretion, so a scheme could not begin without the documents and the consultation being completed.
The Ministry of Housing, Communities and Local Government presented the measure as a way of putting money back into local communities, with decisions taken locally rather than at national level.
London’s case
Sadiq Khan welcomed the bill, saying it would give London greater freedom to raise and invest funding locally, and that the capital had lobbied for such powers for years.
Hospitality bodies warned about the cost to accommodation providers and said the bill does not guarantee that revenue raised would be reinvested in tourism. Their assessments of the effect on costs and jobs are projections, and the balance of those effects is contested.
That objection turns on discretion rather than on the rate. An authority that raised a levy would hold the money within its own budget, and the bill does not commit it to spending the proceeds on tourism promotion or on visitor infrastructure.
For a guest, the charge would be calculated on the accommodation element of a stay rather than on the whole cost of a trip, so meals, transport and attractions would fall outside it. Because the levy would be a percentage, its size would move with the room rate rather than being fixed per night.
What happens next
The bill now begins its passage through Parliament. It must clear both Houses before royal assent, and amendments at later stages could change the scope of the charge, the list of exemptions or the question of a national cap.
For visitors, nothing changes in the near term. No authority can levy a charge unless the legislation passes, and any local scheme would then have to go through consultation and publication before it applied to a booking.
Accommodation providers will be watching three details: the rate an authority chooses, the treatment of the first 28 days of a stay, and the date a scheme would start. For city tourism budgets, the change is structural, because the revenue would be raised and held locally rather than sent to the Treasury.
