Overview
- Chancellor Rachel Reeves is expected to outline devolved powers for mayors under the English Devolution and Community Empowerment Bill, though no policy details have been finalised before the 26 November Budget.
- Mayor Sadiq Khan signalled cautious interest in exploring a levy and is reviewing models used in other cities, with think tank analysis suggesting London would suit a percentage or flat-fee approach.
- Industry body UKHospitality warns a 5% surcharge would act like a higher VAT on stays, potentially pushing the effective tax burden toward 27% once VAT is charged on the levy and risking higher prices for consumers.
- England currently lacks statutory powers for local tourist taxes unlike Scotland and Wales, and the government notes councils can use the Accommodation Business Improvement District model, which Richmond is exploring.
- International precedents vary, from Paris’s per‑person nightly fees to New York’s percentage plus a flat unit charge and Venice’s per‑night and day‑tripper fees, while a 5% example in London would add about £7.50 to a £150 hotel night.