The government announced the plans on 10 September 2026, following a consultation which closed on 18 February 2026.
The levy will not be mandatory. Instead, eligible strategic authorities will be able to decide whether to introduce one in their area, giving local leaders the flexibility to determine how it operates and how the revenue is used.
For hotels, guest houses, holiday lets and other accommodation providers, however, the introduction of a levy could create additional administrative and compliance responsibilities.
What is the Overnight Visitor Levy?
The Overnight Visitor Levy will be a charge applied to overnight stays in short-term visitor accommodation.
The government has confirmed that the levy will be calculated as a percentage of the accommodation cost, rather than as a flat charge. This is intended to avoid disproportionately increasing the cost of lower-priced accommodation.
The levy will be optional at a local level. Mayors and leaders of strategic authorities will decide whether to introduce it, as well as the rate and certain local aspects of how the scheme operates.
Where a levy is introduced, it will apply across the relevant strategic authority rather than being introduced in only selected parts of the area. The funds raised are intended to support local priorities such as public transport, high streets, cultural attractions, public spaces and tourism infrastructure.
Who will be responsible for collecting the levy?
Accommodation providers will have an important role in administering the levy.
Hotels and other businesses providing accommodation will be responsible for accounting for the levy to the relevant strategic authority or mayor.
This means operators will need to consider how the levy is incorporated into their booking, pricing and accounting systems, as well as how it is communicated to customers.
The government has recognised that collecting a levy across different types of accommodation and booking arrangements could be complex. Further guidance is expected on issues including when liability arises, which stays are subject to the levy and how booking platforms will be involved.
These details will be particularly important for businesses taking bookings through third-party platforms.
What accommodation will be covered?
The levy is intended to apply broadly to short-term visitor accommodation, subject to certain national exemptions and additional exemptions that may be introduced locally.
Accommodation or land use that is not provided on a commercial basis will generally fall outside the scope of the levy.
National exemptions are expected to include certain types of temporary accommodation and charitable accommodation providing shelter or refuge.
Strategic authorities will also have the ability to introduce a limited number of additional local exemptions following consultation. These could include accommodation such as tent pitches, touring caravan pitches and dormitory-style accommodation, such as hostels.
The exact exemptions will therefore depend on both the national framework and decisions made locally.
What does this mean for hospitality businesses?
For accommodation providers, the introduction of a visitor levy could mean more than simply adding a charge to the customer’s bill.
Businesses may need to review:
- Booking systems – to ensure the levy is calculated and applied correctly.
- Pricing and customer communications – to make clear when a levy applies and how much customers will pay.
- Accounting systems – to ensure amounts collected are correctly recorded and paid to the relevant authority.
- Online travel agents and booking platforms – businesses will need to understand whether platforms will calculate, collect or pass on the levy, and what information operators will need to provide.
- Advance bookings – businesses may need to consider how bookings made before a levy comes into effect should be treated.
- Compliance and reporting – operators will need to understand their obligations for registering, reporting and paying the levy once the detailed rules are confirmed.
For businesses operating across more than one area, there may also be additional complexity if different strategic authorities introduce different rates, exemptions or administrative arrangements.
Visitor levies are already being introduced elsewhere in the UK
England is not the first part of the UK to introduce a visitor levy.
In Edinburgh, a 5% visitor levy came into effect for eligible overnight stays from 24 July 2026. The levy applies to the cost of paid overnight accommodation, before VAT, and is charged for a maximum of five consecutive nights.
In Wales, Cardiff Council has resolved to introduce a visitor levy from 1 April 2027. The Welsh system provides for a charge of £1.30 per person per night for most accommodation, with a lower rate of 75p for certain accommodation such as camping pitches and shared hostel-style rooms. The levy is subject to VAT where the accommodation provider is VAT-registered.
What should hospitality operators do now?
Although the detailed framework for England is still being developed, businesses that could fall within the scope of a future levy should start considering the potential impact.
In particular, operators should:
- Monitor announcements from their local strategic authority.
- Review their booking and accounting systems.
- Consider how a percentage-based charge could affect pricing and margins.
- Review arrangements with booking platforms.
- Consider how the levy will be communicated to customers.
- Keep track of forthcoming guidance on exemptions, liability and collection.
The government is expected to provide further detail as legislation and implementation arrangements progress. A Bill will be introduced to establish the new powers, with the government expecting mayors and Foundation Strategic Authorities to set out spending plans by early 2028.
For hospitality operators, the key message is to start preparing now, even though the final rules are not yet in place. Understanding how the levy could interact with your booking, pricing and accounting systems will make it easier to adapt when local authorities begin making decisions.
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