London could introduce new tourist tax on visitors

Visitors to some of UK’s major cities, including London, could soon be paying extra, if they stay overnight in hotels or Airbnb style accommodation by paying a tourist tax.

The extra cost could raise hundreds of millions of pounds for mayors to spend on local public transport services.

It comes as the government prepares new powers for local leaders under the English Devolution and Community Empowerment Bill, which is currently progressing through Parliament.

Chancellor Rachel Reeves is expected to outline these plans in her budget this week on Wednesday, that would allow mayors, to introduce a levy if they choose. 

London’s mayor Sir Sadiq Khan cautiously welcomes the idea according to the BBC. Sir Sadiq has repeatedly argued that the capital city should have the same options as other global cities that already apply visitor charges, such as Paris, Toronto, New York, and Tokyo.

If the charge goes ahead, London’s City Hall estimates it could raise up to £240 million a year, depending on the final design of the scheme and visitor demand. 

London welcomed 20.95 million international visitors and 13.96 million domestic visitors, totalling more than 34.9 million visitors last year, according to figures from Road Genius. 

For overnight figures, it's reported that the city recorded 154 million visitor nights in 2024 according to Road Genius.

City Hall officials say any additional revenue could help support local services and manage the pressures created by high visitor numbers.

Business groups say they are waiting for more detail on how the levy would be applied and what visitors might be asked to pay.

The tax would apply to hotel stays as well as short-term rentals, including platforms such as Airbnb. City Hall has not yet confirmed the final model, but discussions have included both a fixed nightly fee and a percentage-based charge added to accommodation bills.

If the bill passes and the new powers are granted, the tax could be introduced as early as the 2027–28 financial year. For now, the debate continues between those calling for stronger local funding and those warning of added burdens on an already fragile sector.

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