Sadiq Khan has backed government plans to give England’s mayors the power to introduce an overnight visitor levy, pledging that any London tourist tax would be capped at 5 per cent of the cost of a night’s stay.
The Mayor confirmed his support on 10 September, writing on X: “I strongly welcome giving London the power to introduce an Overnight Visitor Levy – with the potential to provide an important additional source of funding to support growth, strengthen London’s offer to visitors and help us remain globally competitive.”
Speaking to BBC London, Sir Sadiq said the levy would not exceed 5 per cent per night. “I fully support the government’s decision, after years of lobbying, to give us the same powers that other cities, from New York to Los Angeles, from Chicago to Paris … have, which is the ability to raise a levy on those who come to our great city,” he said. “We’ve got to invest in making sure that [our] city continues to be attractive.”
How the overnight visitor levy would work
Under the government’s latest proposals, the levy would be charged as a percentage of the price of an overnight stay, with lower-cost accommodation paying a lower levy. It would cover hotels, guesthouses, bed and breakfasts, hostels, campsites, self-catering properties and short-term lets, as well as university and religious accommodation when let commercially.
Mayors would be able to set local exemptions and choose to apply the levy in only some of their local authority areas. Members of a combined authority could reject a levy with a two-thirds majority, and the government has said it will not compel any mayor to introduce one, nor cut funding for those who decide against it.
The government published its response to the consultation on 10 September, setting out its decisions on the design and implementation of the levy and the next steps for introducing it. The legal framework would come through an Overnight Visitor Levy bill, which has not yet been tabled in Parliament and is not expected to take effect until next year at the earliest.
A government spokesperson said the design would protect budget holidays “by making sure low-cost accommodation always pays lowest levy”.
Hospitality industry raises concerns
The plans have divided the hospitality sector. Trade body UK Hospitality warned earlier this year that a levy would raise the cost of holidays for households already facing cost-of-living pressures and risked undermining London’s international competitiveness.
Polling reported by The Times suggests visitors are wary. A survey of 1,005 adults from ten countries who had visited London in the past year, carried out by Stack Data Strategy for London Heritage Quarter, found two-thirds expected a tourist tax would put them off. A charge of £5 a night would lead 16 per cent to stay for fewer nights and 11 per cent to be less likely to stay in London at all.
The London Assembly’s economy committee has separately urged the Mayor to continue to engage closely with London’s visitor-economy businesses over any introduction of the levy.
Scotland and Wales are ahead of England: Edinburgh became the first Scottish city to introduce a 5 per cent visitor levy in July, capped at five nights, with Glasgow to follow in January 2027, while Wales is set to introduce a capped levy of £1.30 per person per night from April next year.
The levy is one of several new powers the Mayor has been seeking from ministers as City Hall looks for additional funding for transport, regeneration and cultural investment. Sir Sadiq has argued London needs continued investment to remain an attractive destination for the tens of millions of visitors it receives each year.
Reporting based on UK Government’s consultation response and London Assembly, with additional reporting from CIM Business Events, Travel + Leisure Asia and The Times.
