England's New Tourist Tax: What It Could Mean for Businesses and Visitors

Businesses operating in England's tourism and hospitality sectors could face new tax obligations under government plans to introduce an overnight visitor levy, commonly referred to as a 'tourist tax'.

The proposals would give mayors and strategic authorities across England the power to charge a levy on overnight accommodation, affecting both domestic and international visitors.

While the changes could generate additional revenue for local areas, they may also introduce new administrative responsibilities and financial considerations for hotels, guesthouses, holiday lets and other accommodation providers.

What Is the Proposed Tourist Tax?

The government has confirmed plans to introduce an overnight visitor levy, following a consultation held between November 2025 and February 2026.

Unlike a fixed charge per night, the proposed levy would be calculated as a percentage of the visitor's accommodation spend.

This means the amount payable would vary depending on the cost of the stay, rather than being a standard fee applied to every booking.

The levy would apply to British residents and overseas visitors alike, with the intention of allowing local authorities to raise additional revenue from tourism.

Supporters of the scheme have suggested that funds could be used to support tourism infrastructure, local services and visitor attractions.

However, under the proposed framework, mayors and strategic authorities would have discretion over how the revenue is spent, rather than being required to allocate it exclusively to tourism-related projects.

Who Will Be Able to Introduce the Levy?

Under the government's plans, mayoral and foundation strategic authorities across England would have the power to introduce an overnight visitor levy.

However, the tax would not automatically apply in every area.

Individual authorities would decide whether to implement the levy, subject to certain requirements, including:

• Consulting with local businesses and other relevant stakeholders.

• Providing advance notice before introducing the levy.

• Giving businesses notice of any subsequent changes.

• Establishing local arrangements for administering and collecting the tax.
  

This means the timing and potential cost of the levy could vary between different parts of England.

Which Businesses Could Be Affected?

The proposed levy would apply broadly to businesses providing short-term visitor accommodation.

This could include:

• Hotels and boutique hotels.

• Bed and breakfasts and guesthouses.

• Holiday cottages and short-term rental properties.

• Serviced apartments.

• Other qualifying visitor accommodation.
  

Authorities may be able to introduce certain exemptions, including for charitable accommodation, campsites or shelters.

However, the proposals would not allow exemptions based solely on particular geographical areas within an authority's boundaries.

For accommodation providers, understanding whether their business falls within the scope of the levy will be important once the legislation and local arrangements are finalised.

Who Will Be Responsible for Paying the Tourist Tax?

Although the levy would be linked to the cost of a visitor's stay, accommodation providers would be legally responsible for accounting for and paying the tax.

Businesses would be required to report and pay the levy through a self-assessment process, with local authorities responsible for overseeing collection and compliance.

Accommodation providers would have the option of passing the additional cost on to customers or absorbing it themselves.

This creates an important commercial decision for hospitality businesses.

Passing on the charge could increase the overall price of accommodation, while absorbing the cost could reduce profit margins.

Businesses may therefore need to review their pricing strategies, booking systems and accounting processes ahead of any local introduction.

What Could the Tourist Tax Mean for Hospitality Businesses?

The proposed changes could have several implications for businesses operating in the tourism sector.

Pricing and profitability

Accommodation providers may need to decide whether to include the levy within advertised prices or identify it as a separate charge, subject to the final rules.

Additional administration

Businesses could face new reporting and record-keeping responsibilities to calculate, collect and account for the levy correctly.

Booking and accounting systems

Hotels and holiday accommodation providers may need to update their systems to ensure the appropriate levy is calculated and recorded.

Local differences

As individual authorities would have discretion over whether to introduce the levy, businesses operating across multiple locations may need to manage different local requirements.

Preparing for these potential changes early could help businesses minimise disruption once the legislation is introduced.

When Will the New Tourist Tax Come Into Effect?

The government has confirmed its intention to proceed with the overnight visitor levy following its consultation.

However, the levy is not yet in force across England, and further legislation will be required before authorities can introduce it.

The government has indicated that a bill will be brought before Parliament in due course.

Until the legislation is finalised and individual authorities make decisions about implementation, businesses will need to monitor developments for further details on rates, exemptions and reporting requirements.

Need Advice on How the Tourist Tax Could Affect Your Business?

For businesses in the hospitality and tourism sectors, the proposed overnight visitor levy represents another potential change to operating costs and financial administration.

Understanding the implications for pricing, cash flow and reporting will be important as the government progresses its plans.

At SJC, Chartered Accountants, we support hospitality businesses with tax planning, accounting and financial management, helping them prepare for regulatory changes and make informed business decisions.

If you operate a hotel, guesthouse, holiday let or other visitor accommodation business and would like to understand how the proposed levy could affect you, get in touch with our team today.