What is the UK tourist tax and when could it come into effect?

BRITS planning a domestic getaway could soon face an extra charge on their hotel bills under government plans to hand regional mayors power over a “tourist tax”.

Formally known as the Overnight Visitor Levy, the charge will to hotel rooms, bed-and-breakfasts, and holiday lets like .

The charge is a new levy added directly to overnight accommodation bills in participating regions.

The tax will apply to everyone staying overnight, whether you’re an overseas tourist visiting London or a British family taking a weekend staycation in Yorkshire.

How much will it cost?

The law itself will not set a hard national cap, giving regional mayors .

Unlike flat-rate schemes used in some cities, ministers have designed the tax as a percentage of the total room rate.

Labour’s regional mayors have committed to keeping any tax rate under 5% to avoid driving away visitors.

With the national average hotel room sitting around £198 a night, a 5% levy would add nearly £10 per night to a stay.

Over a week-long family staycation, that could add up to £70 extra on accommodation costs.

Because the tax is calculated as a percentage, cheaper accommodation will incur lower fees than luxury five-star hotels.

Day-trippers who do not stay overnight will not have to pay.

Where will it apply?

The powers will be available to .

Destinations set to include:

• Greater Manchester
• Liverpool City Region
• London
• North East England
• West Yorkshire
• York and North Yorkshire

Existing voluntary schemes, such as Manchester’s flat £1-a-night city charge, are expected to be replaced by the new percentage levy.

Similar capped levies are already live in Edinburgh and due in Wales by April 2027.

When will it come into effect?

Holidaymakers don’t need to worry about immediate extra fees.

Before any tax appears on final bills, Parliament must pass the Overnight Visitor Levy Bill.

Local mayors are expected to set out their proposed spending plans by March 2028.

That means the tax is unlikely to take effect before late in the 2027–28 financial year or into 2028.

Why is it controversial?

Supporters say the move brings England in line with popular international destinations like Paris, Venice, and Rome.

Housing Secretary and London Mayor have said the raised funds will stay local, funding , high streets and cultural attractions without having to rely on Treasury coffers.

But hospitality leaders and owners have criticised the plan.

Trade body UKHospitality warns and put jobs at risk by during an ongoing cost-of-living squeeze.

Major domestic operators and local traders fear the policy will hit hard-working families worst.

Resorts like Butlin’s have warned that an unlimited tax risks making UK family breaks unaffordable, damaging demand, and hurting youth employment.

Independent business owners are equally worried.

Caron Cooper, who has run the Fosse Farmhouse B&B in the Cotswolds for 42 years, said the tax comes as small operators struggle with rising costs.

“Just as we felt like we are coming through it and tourism’s back, really,” she said.

Urging ministers to swap a percentage penalty for a flat £1 charge, she added: “If it was a pound on each booking then I could understand that, they would just be able to afford [it].

“Just to add a percentage, I think, no, it’s unfair and it will hit the poorest the most.”

Could Brits be exempt?

Under current government plans, the Overnight Visitor Levy is designed to apply to everyone staying in paid accommodation.

It will apply regardless of whether you’re an overseas tourist, a Brit on a family staycation, visiting relatives, attending a university open day, or someone travelling for business.

Everyone paying for an overnight stay in a participating area will see the charge added to their final bill.

Ministers and local authorities have ruled out creating “Brit discounts” or local exemptions for several reasons.

For instance, forcing hotel staff and B&B owners to verify passports, driving licences, or bills to prove local residency would create administrative chaos for small hospitality businesses.

The charge only targets commercial, paid accommodation – crashing on a spare bed or sofa will remain tax-free.