England is preparing for a major shift in the way local authorities can raise revenue from tourism. Under new powers announced in the 2025 Autumn Budget, “Mayoral Strategic Authorities” in England will be able to introduce an Overnight Visitor Levy. This levy is a charge applied to short-term stays in commercial accommodation and follows similar levies already announced in certain cities in Scotland and Wales.
Although the final rules will vary by region, the initially released consultation document expects to reshape the compliance landscape for a wide range of accommodation providers.
Who Will Be Caught by the Overnight Visitor Levy?
Any business offering short-term accommodation could fall within scope. This appears wide and non-specific on the surface (and it is) but after the consultation concludes, this definition could be narrowed down to include:
Hotels of All Sizes
From major chains to small independents, hotels are squarely within the definition of chargeable accommodation. Urban centres such as London, Manchester, Birmingham and Liverpool are expected to be early adopters of this levy, meaning hospitality businesses in those areas should prepare for additional compliance obligations.
Bed & Breakfasts (B&Bs)
Traditional B&Bs, guest houses and family-run lodgings may also be affected. As the levy is applied per stay, even smaller establishments will need to register, keep records and determine whether to pass the charge on to guests.
Hostels
Budget accommodation providers such as youth hostels, backpacker hostels and group lodgings could also end up falling within the scope of this tax, being dubbed by some as the “tourist tax.” This includes dormitory-style accommodation as well as private hostel rooms.
Self-Catering Properties & Holiday Lets
The levy may cover self-catering accommodation such as:
- Holiday cottages
- Airbnb-style short-term lets
- Lodges and cabins
Given the rapid growth of booking platforms, this category is expected to capture a significant number of small, informal or part-time hosts who may have little experience with tax-style compliance regimes.
Serviced Apartments & Aparthotels
Businesses offering apartment-style stays with hotel-like services will likely also be fully within scope. These providers may face additional complexities due to varying room types, long-stay discounts and blended commercial models.
Campsites, Caravan Parks & Glamping Providers
The levy may apply not only to buildings but also to stays on land, including tents, caravans, mobile homes, motorhomes and glamping pods. Operators may be required to charge the levy per pitch or per person, depending on the structure adopted by the local authority.
Student Accommodation (Commercial Lets Only)
If student accommodation, like halls or university accommodation facilities, are rented out commercially during holiday periods, which is a common practice in major cities, those stays may become chargeable. Providers will need to separate commercial bookings from standard student use.
Accommodation in Vehicles or Vessels
Moreover, the levy could also cover vehicles or vessels “permanently or predominantly situated in one place.” This could include:
- Moored houseboats
- Stationary caravans used as holiday lets
- Converted buses or vans used as fixed accommodation
Who Will Be Responsible for Paying the Overnight Visitor Levy?
Accommodation providers, not guests, bear the legal responsibility for the levy. This means those providing the aforementioned types of accommodations will have to:
- Register with the local authority
- Calculate the levy
- Maintain appropriate records
- File returns
- Pay the levy to the authority
Providers will also need to determine whether to pass the levy on to customers as a visible line item or absorb it as an operational cost.
What’s Still to Be Decided?
While the Autumn Budget has enabled the overnight visitor levy, it has also left many details to be determined locally and subject to further consultation. Local authorities will need to decide whether the levy should operate as a flat rate per night or as a percentage of the accommodation cost, and whether it should be charged per room, per person or on another basis entirely.
There is also the question of exemptions or reliefs, such as whether long-term stays, specific types of accommodation or certain groups of visitors might be excluded. Another critical unknown is how aligned different authorities will be in designing their schemes, as inconsistent rules could create a complex patchwork across England. These uncertainties may introduce considerable administrative challenges, especially for businesses that operate in multiple regions or run national chains.
How Service Accommodation Businesses Should Prepare for the Overnight Visitor Levy
Although the levy may not come into force immediately, accommodation providers should begin reviewing their internal systems and operational processes to ensure they are ready. This preparation includes assessing whether booking and billing systems can accommodate the new charge, determining how the levy will be presented to guests and planning for the associated registration, reporting and filing duties.
Businesses should also closely monitor ongoing consultations to stay ahead of any changes, while revisiting their pricing models to understand how the levy may affect profitability and competitiveness. Service accommodation providers in areas with active or ambitious mayoral authorities (such as Manchester, the West Midlands, Greater London, the Liverpool City Region and West Yorkshire) should be particularly proactive, as these regions are considered likely early adopters.
Conclusion & Next Steps
The Government has opened a consultation on the Overnight Visitor Levy, running until 18 February 2026, giving accommodation providers and other stakeholders the opportunity to provide input on the scheme.
Several key aspects remain under consideration. These include whether a minimum threshold for liability should be introduced, how levy rates should be structured (either as a flat charge or a percentage of the accommodation cost) and the exact way local authorities will implement their schemes.
The levy is expected to be charged on the date of arrival, rather than the date of booking or payment. Providers will be legally responsible for registering, keeping records, filing returns and complying with civil enforcement powers, including interest and penalties for non-payment.
Stakeholders are encouraged to respond to the consultation to help shape the final rules before local authorities begin implementing their schemes.
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