SUK Cities to Introduce “Tourist Tax”: London, Manchester, and Others Eye Overnight Levies for 2026

Published on December 2, 2025

For decades, the United Kingdom has been a global anomaly in the world of tourism. While visitors to Paris, Rome, New York, and Barcelona have long grown accustomed to paying a small “city tax” or “visitor levy” upon checkout, travelers to London and Manchester have enjoyed a reprieve. The price on the booking screen was the price you paid. But if recent government proposals are anything to go by, that era of tax-free tourism is rapidly coming to a close.

In a landmark shift that aligns England with its European neighbors—and its Scottish cousin, Edinburgh—the UK government has unveiled plans to grant local mayors the power to introduce a levy on overnight stays. The proposal, embedded in the new English Devolution and Community Empowerment Bill, has set the stage for a major transformation of the UK’s visitor economy by 2026.

While city leaders hail it as a long-overdue mechanism to fund crumbling infrastructure, the hospitality industry warns it could be the final nail in the coffin for a sector already struggling with some of the highest operating costs in the world.

Power to the Mayors: The Blueprint for a Levy

The core of the proposal is decentralization. The national government isn’t imposing a blanket tax; instead, it is handing the keys to regional mayors. This means that Sadiq Khan in London, Andy Burnham in Greater Manchester, and other regional leaders across England will have the autonomy to decide if, how, and how much to charge visitors.

The levy would apply to almost all forms of paid accommodation:

• Hotels: From budget chains to five-star luxury suites.
• Short-Term Rentals: Platforms like Airbnb and Vrbo will likely be included to ensure a level playing field.
• B&Bs and Guesthouses: Smaller operators would not be exempt under current proposals.

The revenue generated—estimated to be potentially hundreds of millions of pounds annually—would not go to the central Treasury. Instead, it would be ring-fenced for local use, specifically to fund the services that tourists utilize most: public transport networks, street cleaning, cultural festivals, and the maintenance of public spaces.

London and Manchester: Leading the Charge

Two of England’s most prominent mayors have been vocal champions of this initiative.

London: For Mayor Sadiq Khan, the levy is a matter of fairness. London welcomes nearly 40 million visitors annually, placing immense strain on the Transport for London (TfL) network and police resources. Khan has argued that a “modest” fee—potentially ranging from £2 to £4 per night or a percentage of the room rate—would generate up to £240 million a year. This war chest could be used to plug funding gaps in the Tube network and support the capital’s struggling nightlife venues.

Manchester: In the north, Mayor Andy Burnham sees the levy as a tool for sustainable growth. Manchester has introduced a voluntary “City Visitor Charge” in recent years through a Business Improvement District (BID) scheme, charging £1 per night. The new legislation would formalize and likely expand this, turning a voluntary contribution into a mandatory statutory requirement. Burnham argues that if Manchester is to compete with cities like Barcelona or Berlin, it needs a dedicated revenue stream to maintain a world-class environment.

The Edinburgh Precedent: It’s Already Happening

Critics who say a tourist tax “won’t work in Britain” need only look north of the border. Edinburgh has already blazed the trail, becoming the first UK city to officially approve a visitor levy.

Set to launch in July 2026, the Edinburgh scheme will charge a 5% levy on the cost of accommodation, capped at seven nights. For a family staying in a £200-a-night hotel, that’s an extra £10 per day. The revenue is earmarked for housing, city maintenance, and managing the crush of the annual Fringe Festival. Edinburgh’s move has effectively broken the taboo, providing a working model that English cities are now eager to replicate.

The Hospitality Backlash: “Taxing Fun”

While politicians see revenue, businesses see risk. The proposal has been met with fierce resistance from the hospitality sector, led by trade body UKHospitality.

Their argument is economic. The UK already has one of the highest rates of VAT (Value Added Tax) on hospitality in Europe at 20%. Unlike France or Germany, which offer reduced rates for hotels and restaurants, the UK charges full freight.

Kate Nicholls, Chief Executive of UKHospitality, has described the proposal as “deeply misguided.” The industry fears a “triple whammy” for international visitors:

High VAT: Making hotels expensive to begin with.

No Tax-Free Shopping: The UK scrapped VAT refunds for tourists post-Brexit, driving high-spending shoppers to Milan and Paris.

The Tourist Tax: An additional surcharge on top of an already pricey destination.

Hoteliers argue that while a £3 tax might not deter a wealthy American tourist, it could severely impact the domestic market and budget-conscious European travelers who have plenty of cheaper alternatives. They warn that “taxing fun” during a cost-of-living crisis could drive visitors to destinations that offer better value for money.

A Global Norm or a Local Burden?

Proponents argue that the UK is simply catching up with the rest of the world.

• Paris: Recently increased its tourist tax, charging up to nearly €15 per night for luxury stays to fund the metro ahead of the Olympics.
• Venice: Charges day-trippers an entry fee to combat overtourism.
• New York: Adds nearly 15% in various taxes to every hotel bill.
• Bali: Recently introduced a flat entry tax for all foreign arrivals.

In this context, a small levy in London or Manchester seems almost inevitable. The modern traveler is accustomed to seeing these line items on their bill. The question remains: will the visible improvements in infrastructure justify the cost?

What This Means for Your 2026 Trip

If you are planning a trip to the UK in late 2026 or beyond, budgeting is about to get a little more complex.

• Expect to Pay More: Factor in an extra 5% or a flat fee of roughly £3-£5 per person, per night.
• Check the Exemptions: Edinburgh’s model exempts campsites and disability-related stays; English cities may follow suit.
• Look for Value: As costs rise in major hubs, secondary cities without levies (like Liverpool or Leeds, initially) might become more attractive budget options.

The consultation period for the new English levy runs until February 18, 2026. Until then, the debate will rage on. But one thing is clear: the era of the “free” stay in the UK is ending. The future of British tourism will come with a surcharge—the only question is whether travelers will think it’s worth the price.