Mayors given powers to introduce uncapped visitor levy

The government has announced that mayors in England and leaders of Foundation Strategic Authorities in England will be given the power to introduce an overnight visitor levy, with no national cap on the rate. 
The levy would be charged as a percentage of the accommodation cost for overnight stays, covering accommodation such as hotels, holiday lets, campsites, holiday parks and B&Bs.
The announcement follows the Government’s response to its consultation on a Visitor Levy in England, which sets out how the levy could be designed and implemented.

What has been decided?

Under the Government’s proposals:

•    The levy will be a percentage of the accommodation cost, rather than a flat fee, and will be uncapped nationally.
•    There will be no national limit on the number of consecutive nights on which the levy can apply.
•    There will be no mandated national notice period for introducing a levy, with the Government dropping its proposed 12-month notice period.
•    Accommodation providers will be responsible for collecting and paying the levy through a self-assessment system, with strategic authorities acting as tax authorities.
•    Local leaders will have the ability to introduce exemptions, potentially including campsites, allowing them to take account of local circumstances.

The government said charging a percentage rather than a flat fee would protect budget holidays from disproportionate costs. Media reports suggested Labour mayors in 10 city regions would voluntarily limit the charge to 5%, following concerns about the impact on visitors and businesses.

The proposals also raise concerns that the introduction of the levy will raise the VAT threshold interaction, with the levy being added to accommodation bills, bringing businesses into the VAT system, adding further burden and discouraging growth.

A bill will be introduced in due course to bring in the levy and government expects mayors and Foundation Strategic Authorities leaders to set out spending plans by early 2028.  

NCC response

The NCC has firmly opposed a tourism tax, alongside other organisations across the hospitality and tourism sector. Research has indicated that a tourism tax could cost around 33,000 jobs and £2.2 billion in GDP by 2030. We remain concerned that an additional levy will put further pressure on families and tourism businesses, particularly in rural and coastal communities that rely heavily on visitor income.

However, the legislation is coming, mayors want it, and therefore we must now look to concentrate on influencing its design and local implementation.  The NCC's key asks of Government will be press for a VAT cut to 10% before any levy is introduced, exclude levy receipts from turnover for VAT threshold purposes, require a sector-specific impact assessment and reinstate a minimum notice period. 

Where a levy is introduced, the NCC believes that all revenue raised must be ring-fenced and reinvested directly into supporting and strengthening the local tourism economy.