London, a city renowned for its iconic landmarks, vibrant arts scene, and bustling streets, is on the brink of a significant change for its millions of visitors. As reported by BBC and corroborated by other outlets on November 23, 2025, the mayor of London is expected to be granted the authority to introduce a tourist tax on overnight visitors—something that could reshape the capital’s tourism landscape and provide a much-needed boost to local infrastructure.
The proposed tourist levy comes as part of the English Devolution and Community Empowerment Bill, currently making its way through Parliament. If passed, this legislation will empower Sir Sadiq Khan and other local leaders to implement a tax that estimates suggest could raise up to £240 million annually. With London recording an astonishing 89 million overnight stays in 2024, the potential for substantial new revenue is clear.
But what exactly is a tourist tax, and how would it work in London? According to the Centre for Cities think tank, there are three primary models for such levies across G7 cities: a percentage rate on accommodation costs (used in New York City and Toronto), a flat fee per night (like Tokyo), and variable rates based on accommodation type and star rating (as seen in France and Italy). Given that Britain lacks a national statutory ‘star’ hotel rating system, experts suggest London is best suited to either a flat fee or percentage-based approach—or perhaps even a hybrid of both, offering flexibility based on demand and accommodation type.
To put the numbers in context, a £1 per night levy could generate £91 million annually, while a 5% charge on accommodation bills could reach the £240 million mark, according to a 2017 estimate by the Greater London Authority (GLA). These figures are not just theoretical; similar taxes in other global cities have produced impressive results. For example, New York raises £493 million each year with an average nightly rate of £14.86 per visitor, while Tokyo’s flat fee brings in £35 million despite hosting the world’s highest number of overnight stays.
London’s move toward a tourist tax is also notable because, as of now, England is the only G7 country where local authorities are barred from imposing such levies. Scotland and Wales have already introduced their own versions: Scottish local authorities can set percentage rates on daily accommodation bills, and from 2026, Welsh councils will collect £1.30 per night from visitors. The trend is clear—major tourist destinations are seeking ways to ensure visitors contribute to the upkeep of the cities they enjoy.
The motivations behind the proposed levy are multifaceted. The Centre for Cities briefing points out that, if implemented effectively, a tourist tax could both stimulate economic growth and provide a flexible revenue stream for local governments. These funds could be directed toward improving infrastructure, public transport, and the business environment—benefiting both residents and the millions who flock to London each year. The mayor’s office echoed this sentiment, with a spokesperson stating, “The mayor has been clear that a modest tourist levy, similar to other international cities, would boost our economy, deliver growth and help cement London’s reputation as a global tourism and business destination.”
Flexibility is key, according to Andrew Carter, chief executive of Centre for Cities. He pointed to the Scottish model, where cities like Edinburgh and Glasgow are introducing percentage-based levies on hotel, B&B, and short-let stays. “A key benefit of that approach is that it’s flexible, and the rate could rise and fall depending on the demand for overnight stays,” Carter explained. He further emphasized that revenues should ideally be split between City Hall and the boroughs, and not ring-fenced by central government, to maximize local benefit.
Support for the tax is strong among several London boroughs. Westminster, home to landmarks like Big Ben and Buckingham Palace, has advocated for an overnight stay levy for years. Council leader Adam Hug highlighted the unique pressures Westminster faces, with a daytime population exceeding a million and local taxpayers effectively subsidizing city services for the entire capital. “Something through an overnight stay levy that helps redress that balance would be enormously welcome and enable us to do more creative things in the future,” Hug told BBC. Other boroughs, including Southwark and Brent, have also expressed support.
However, not everyone is on board. The hospitality industry, represented by UK Hospitality, has voiced strong opposition. Kate Nicholls, chair of the trade body, labeled the idea as “shocking,” warning that “this will have a really big impact on British consumers, it’s a tax on hardworking British families having a short break in London and it will deter visitors from coming in.” She further noted that with a VAT rate of 20% already in place, “it’s a tax on a tax,” and cautioned that additional costs could drive visitors elsewhere, ultimately harming the city’s economy, jobs, and investment.
Despite these concerns, research cited by the Centre for Cities suggests that a modest tourist levy is unlikely to significantly deter visitors, especially in a destination as popular as London. The city’s global status and enduring appeal mean that most travelers are less sensitive to such charges, especially when compared to less-visited locations. This view is supported by international examples, where tourist taxes have generally not led to dramatic drops in visitor numbers.
The proposed levy is also seen as part of a broader move toward devolving fiscal powers to London. As Carter put it, “London is the most productive big city in the UK, and devolving more fiscal powers would give the capital more policy tools to accelerate growth in the economy.” The ability for the mayor to adjust the tax rate in response to changing visitor patterns—much like Toronto did ahead of the upcoming World Cup—could make the system even more responsive and effective.
It’s worth noting that local initiatives, such as Richmond Council’s exploration of an Accommodation Business Improvement District (ABID), might be superseded by a London-wide levy. If the city-wide tax goes ahead, existing schemes would likely be scrapped in favor of a unified approach.
For now, the mayor’s office is awaiting formal announcements and has refrained from making concrete preparations, preferring to wait until the chancellor—widely expected to announce the move in the coming months—makes things official. A spokesperson for the Ministry of Housing, Communities and Local Government confirmed, “We are always open to hearing views from local leaders on issues like this. Places can already choose to introduce a levy on overnight stays through the Accommodation Business Improvement District (ABID) model.”
As London stands on the threshold of introducing a tourist tax, the debate reflects broader questions about how world-class cities can sustainably fund the infrastructure and services that make them attractive in the first place. While opposition from the hospitality sector remains strong, the potential benefits—in terms of both revenue and improved city services—are clear. The coming months will reveal whether London joins the ranks of global capitals using tourist levies to maintain their status as leading destinations for generations to come.
