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UK: England’s regional mayors were set to be given new powers to introduce a levy on overnight stays, enabling local authorities to raise funds for transport, infrastructure and the visitor economy, according to plans announced by the Ministry of Housing, Communities and Local Government ahead of this week’s Budget.

The new proposal would allow mayors in England to levy a charge on overnight stays, including in short-term holiday rentals, with the fee applying to all guests not only international tourists.

The proposed measure would align English regions with destinations such as New York, Paris and Milan, where visitor charges are already in place. The levy would apply to accommodation including short-term lets, hotels, B&Bs and guesthouses, with mayors deciding whether to introduce the fee in their area.

The government said the proposals formed part of its wider devolution agenda aimed at giving regional leaders greater financial control. A 12-week consultation opened on Tuesday and will consider issues such as how the levy should operate and whether there should be a cap on the charge.

Local government secretary Steve Reed said the powers would help mayors “put more money into local priorities” and support long-term growth. England attracts more than 130 million overnight visits each year, and research commissioned by the government suggested that “reasonable” fees have a minimal impact on visitor numbers.

Mayors across England welcomed the plans, including London mayor Sadiq Khan, Greater Manchester mayor Andy Burnham, Liverpool City Region mayor Steve Rotheram and West Yorkshire mayor Tracy Brabin. They said additional revenue could support regional transport, cultural investment and visitor-facing improvements. Some city leaders suggested that the levy could help fund high-footfall areas or support event-driven demand.

Not all regional leaders intend to use the powers. Tees Valley mayor Lord Houchen said he would not introduce a levy in his region, opposing what he called a “tourist tax.”

The hospitality industry warned that any charge would be passed on to consumers and risk reducing domestic demand. UKHospitality chief executive Kate Nicholls said the levy would add costs for visitors and could reduce competitiveness. Industry groups also raised concerns that domestic travellers, including those on weekend breaks or visiting family, would be affected.

Questions have also been raised about how revenue would be shared between mayoral authorities and local councils. Westminster City Council leader Adam Hug said mayors should be required to share funds with boroughs responsible for delivering local services in high-footfall areas.

England is currently consulting on the proposals, with the consultation due to close on 18 February.

Highlights:

  • England set to introduce powers for mayors to levy overnight stay charges across hotels, short-term rentals, B&Bs and guesthouses.
  • Levy would apply to UK residents and domestic travellers, not only international tourists.
  • Government says fees would support local transport, infrastructure and visitor-economy investment.
  • Short-term rental operators may face new compliance and collection requirements once powers are implemented.
  • Hospitality industry warns the levy could increase costs for guests and reduce competitiveness.
  • Consultation on the proposed overnight stay levy runs until 18 February.