The UK government is considering the introduction of a “tourist tax” on overnight stays in London, a move expected to generate hundreds of millions of pounds annually but drawing criticism from the hospitality sector.
Chancellor Rachel Reeves is preparing legislation that would grant mayors across England the authority to levy charges on tourists staying in hotels, guest houses, and Airbnb properties. If approved, London would join global cities such as Paris, Munich, Milan, Toronto, New York, and Tokyo, which already impose similar fees.
Government estimates suggest the levy could generate up to £240 million a year, based on nearly 90 million overnight stays in London. A 2017 analysis by the Greater London Authority (GLA) found that a £1-per-night charge could bring in £91 million annually, while a 5% levy could raise as much as £240 million.
City leaders argue the funds could support public transport, city services, and tourism management, particularly as London prepares for the influx of Christmas and New Year holiday travellers. Mayor Sadiq Khan has indicated that a “modest tourist levy” would strengthen London’s economy and help maintain its reputation as a global destination.
However, the proposal has triggered strong opposition from the hospitality industry. Kate Nicholls, Chief Executive of UK Hospitality, called the idea “shocking,” warning that the tax would unfairly burden British families and deter both domestic and international tourists.
She emphasized that overseas visitors are critical to London’s economy and that additional taxation could impact jobs, growth, and investment.
A briefing from the think tank Centre for Cities, commissioned by the GLA, concluded that London could see a significant drop in visitors if it adopts a levy comparable to other major cities.
Despite these warnings, supporters of the tax argue that the potential revenue boost outweighs the risks, especially in light of rising transport costs, government budget pressures, and the growing strain on public services. The debate highlights a balance between generating much-needed funds and maintaining London’s appeal as a leading global tourist destination.
