England’s New Tourist Tax Has No National Cap – What Does That Mean For Hospitality Businesses?

England is officially getting local tourist taxes. On 10 September, ministers published their consultation findings, confirming that regional authorities will be able to levy a percentage charge on overnight stays at hotels, guesthouses, B&Bs and holiday rentals. The setup is discretionary for local councils, and the government has intentionally left the maximum rate uncapped in the setup it’s proposing.

Right now, Labour’s ten regional mayors have promised to cap their local rates at 5%, but that’s a gentleman’s agreement rather than a legal guarantee, leaving the door open for future leaders or different political parties to increase the percentage.

Before anyone panics, it helps to separate the structure from immediate reality – no one is paying a new room tax just yet. This is simply the policy structure, meaning a full bill must still pass, and authorities aren’t expected to publish concrete spending strategies until early 2028.

Local leaders still have to choose whether to implement a charge, gather feedback from local businesses and figure out the logistics. It’s also completely distinct from Scotland’s setup, where Edinburgh’s scheme runs as a flat 5% fee capped at five nights.

The point is that England is heading toward a mosaic of local rules. Instead of a single national tourist tax, the policy enables dozens of different regional levies, each running on its own timeline, rate, spending agenda and list of exemptions. For accommodation owners and frequent business travellers, the pressing concern is whether a non-binding political promise can actually protect businesses from a fragmented mess once different authorities start pulling the levers.

Why Trade Bodies Are Raising The Alarm

The pushback from trade groups goes deeper than just resistance to new taxation.

ABTA argues that a percentage model disproportionately penalises luxury and boutique accommodation compared to a flat nightly rate. UKinbound criticises the regional setup as an operational nightmare, calling for a fixed national system instead of a postcode lottery. At the same time, the World Travel and Tourism Council warns that higher trip costs could steer holidaymakers and capital toward competing destinations altogether.

UKHospitality takes the warning even further, claiming an uncapped charge could inflict a £1.6 billion hit on the sector, bump the price of a typical family holiday up by £100 and threaten up to 33,000 jobs. Those are the trade group’s own projections, not official guarantees, but they capture the depth of concern across the market.

Conversely, government officials insist that targeted levies fund the essential facilities that keep destinations competitive. The Liverpool City Region, for example, expects a levy could pull in up to £18 million annually for events, cultural projects and local transport, though that’s only one regional forecast.

We put the question to the people on the ground. How would a levy like this actually hit bookings, pricing and overall competitiveness, and does the lack of a legal cap worry them more than the levy itself?

Our Experts

• Siarhei Sulimau, CEO and Founder, EnglishPapa
• Amy Boyton, Director of Franchise Sales, Pass the Keys
• Julia Doust, Founder and Editor, The European Compass

Siarhei Sulimau, CEO and Founder, EnglishPapa

“I run EnglishPapa, and on the hospitality side I own and operate Aviator Bali, an apart-hotel in Bali. Managing accommodation in a competitive international tourism market has shaped my view on England’s proposed visitor levy: the real issue isn’t the tax itself, it’s the inconsistency around it.

“Any percentage-based charge eventually lands in the guest’s final bill, and in a market where travellers compare prices across destinations in seconds, that matters. Most guests don’t mind paying a levy if they understand where the money goes: tourism infrastructure, local services, upkeep of the places they’re visiting.

“What concerns me more is fragmentation. If every English region sets its own rate, we get a messy, inconsistent pricing picture, especially painful for cities directly competing for the same visitors. Hotels can’t price transparently or competitively when the rules shift by postcode, and guests end up confused about what they’re paying and why. My honest take: a lack of national framework is a bigger risk than the levy itself. Consistency, not the charge, is what will make or break this policy.”

Amy Boyton, Director of Franchise Sales, Pass the Keys

“From new licensing rules and visitor taxes to council tax hikes and minimum night stays, short-term rentals are being burdened with measures that claim to fix housing but end up penalising tourism and the people who rely on it.

“Visitor taxes aren’t a one-size-fits-all solution. In many towns and cities, they simply push up costs for guests, and that includes domestic travellers who already pay their share through existing taxes and local spending. These levies can bring benefits, but not every destination has the constant pull of a city like London, and most places can’t impose extra charges without risking losing bookings.

“In places like Edinburgh and Glasgow, where levies have already been approved, our local managers are stuck between absorbing the extra cost or risking fewer bookings. If they raise prices by 5% to offset the tax, they risk becoming uncompetitive. Add that to licensing fees, and it’s no surprise many Scottish hosts are seriously considering shifting to mid-term lets instead, given traditional long-term rentals simply don’t work for most holiday homes as they’re often rural, seasonal or used part-time by owners. We need more balanced policymaking if we are to maintain the very tourism economies these measures claim to support.”

Julia Doust, Founder and Editor, The European Compass

“I was the owner of a 21-room establishment in France when my local council decided to impose a tourist tax. It made no difference whatsoever to my bookings.

“Now I cover cities across Europe, almost all of which impose a tourist tax. Visitors expect it. It doesn’t make a difference to their decision-making process. Costs have to rise 20 to 30% before people start to compare different destinations.

“The only difference can come when travellers have set themselves a limit per night, say €200. If the tourist tax puts them over that limit for a certain hotel, they may choose a cheaper hotel, but they don’t change destination.”