London has been considering introducing a tourist tax which the mayor, Sir Sadiq Khan, has said will be capped at 5%.
Last week the UK Government confirmed that powers will be handed to mayors and local leaders to introduce a levy on overnight stays as “part of a devolution drive to shift power out of Westminster”.
The government believes that this money could be spent on high streets and public transport as well as “events to boost tourism and drive good growth”.
The World Travel & Tourism Council (WTTC) has warned that this will make the UK less competitive as a global destination with higher costs threatening to divert visitors, spending and future investment towards competing markets. The WTTC quote from research undertaken earlier in the year stating that travellers from the US, France and Germany have said they would consider going elsewhere if a €10 visitor tax was introduced. And the body confirmed that from their study around 40% of UK travellers said they would holiday elsewhere if they had to pay the surcharge.
loria Guevara, President and CEO, WTTC, said: “The UK should be making it easier to visit, not more expensive. Travellers have choices, and if the UK becomes less competitive, they will take their spending elsewhere. The risk is that higher costs mean less visitor spending, weaker growth and fewer opportunities for the people and businesses that depend on Travel & Tourism.
“The Government should be focused on keeping the UK attractive and competitive as a destination. If we make it more expensive to visit, we risk losing the very visitors whose spending supports local economies across the country.”
Looking at London from Edinburgh
Dr Ewelina Lacka, Reader in Digital Marketing & Analytics and Head of Marketing Group at the University of Edinburgh’s Business School, has offered an opposing view.
Dr Lacka said: “London is the UK’s most visited city, followed by Edinburgh. Both cities benefit from a booming tourism economy; however, they also face challenges that a tourism levy may help address. As London considers implementing a tourism tax, it can learn from Edinburgh. From July 2026, Edinburgh City Council is collecting a 5 per cent levy on overnight tourism accommodation, which is also what the London mayor is proposing.
“In Edinburgh, initial concerns about a negative impact of the visitor’s levy on tourism demand did not seem to materialise; the city experienced an increase in visitor numbers during the Fringe Festival despite the additional charge. Funds collected as a result of the Edinburgh visitor levy are to be used not only to improve visitor experience but also to generate societal impact.
“The Edinburgh case teaches important lessons: visitor decisions are not price-driven; visitors seem to prioritise the cultural value of the destination. London has much to offer to visitors – will a 5 per cent charge on additional overnight accommodation deter visitors? Learning from Edinburgh’s case, it seems unlikely.”
The UK Government consulted on tourist tax proposals for England in 2025 and cite other countries where such levies are already in place – in Germany, the US, Italy, the Netherlands and Canada.
Secretary of State for Housing, Communities and Local Government, Angela Rayner, said: “Our amazing towns and cities, and our picturesque rural and coastal communities welcome millions of visitors every year – local leaders should have the power to make the most of that popularity.
“This measure will give mayors the choice to raise and reinvest funding where it’s needed most. It’ll help support the local services, public spaces and attractions that both residents and visitors rely on, with decisions taken by people who know their area best.”
Mayor of London, Sadiq Khan, said: “I strongly welcome the Government giving London the power to introduce an Overnight Visitor Levy. This needs to happen sooner rather than later. London’s visitor economy is a huge success story, supporting jobs, businesses and investment across the capital and the wider country, and I have long argued that London should have the same flexibility as other major global cities to raise and invest funding locally.
“A well-designed, modest levy has the potential to provide an important additional source of funding to support growth, strengthen London’s offer to visitors and help us remain globally competitive. It would allow us to reinvest in the places, infrastructure, culture and experiences that make London one of the world’s greatest cities to visit, while helping manage the pressures that come with welcoming tens of millions of visitors every year.
“I will work closely with London’s boroughs, accommodation providers, hospitality and tourism businesses and other partners, before final decisions are taken.”
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