A new government proposal to levy a small charge on overnight stays could hand local leaders a fresh tool to boost growth in their own backyards. Under plans set out on GOV.UK, mayors and council leaders across England would gain the power to introduce a targeted “tourist tax” on hotel and short-stay accommodation, with revenues ringfenced for local priorities. Ministers argue the measure will help visitor-heavy areas manage pressure on services and invest in better transport, public spaces and cultural attractions-without increasing council tax for residents. As town and city centres continue to navigate post-pandemic recovery and changing travel patterns, the levy is being pitched as a way to turn tourism into more tangible, long-term gains for local communities.
New tourism levy on overnight stays aims to boost local investment
City leaders across England will soon gain a new tool to support public services and cultural assets, as councils are handed powers to introduce a modest charge on visitors who stay overnight in hotels, guesthouses and other paid accommodation. The measure, which will be set locally and ringfenced for place-based improvements, is designed to ensure that those who benefit from local amenities contribute directly to their upkeep and future progress. Under the plans, revenues could be directed into projects that sustain a thriving visitor economy while easing pressure on day-to-day council budgets.
Local authorities are expected to consult with residents and businesses before setting any rate, with ministers emphasising that the approach must remain transparent and accountable. In practice, this could see town halls working with hospitality and tourism partners to prioritise spending on:
- Transport links and safer, well-lit streets
- Parks, waterfronts and heritage sites that attract visitors
- Events and festivals that extend the tourism season
- Town-center regeneration and high street improvements
| Example Use | Local Benefit |
|---|---|
| Upgrading seafront promenades | More year-round visitors and safer public spaces |
| Funding cultural trails and signage | Stronger local identity and longer stays |
| Improving bus routes to attractions | Reduced congestion and better access for residents |
How mayors plan to channel levy revenues into growth and regeneration
Local leaders are already sketching out detailed investment maps for the new revenue stream, aiming to turn each overnight stay into visible, long-term benefits for residents and visitors alike. City-region authorities are exploring targeted funds that blend levy income with existing budgets to unlock stalled projects, from transforming derelict high streets to expanding cultural quarters and conference districts. In practice, this means more than cosmetic upgrades: combined authorities are modelling how to use the proceeds to tackle deep-rooted issues such as poor transport links to visitor hubs, undersupply of affordable workspace for creative industries and a shortage of skills in hospitality and tourism.
Emerging plans highlight a pipeline of projects that can be scaled as receipts grow year on year, with decisions shaped by local data, consultation and transparent reporting. Typical priorities include:
- Revitalising town centres with public realm improvements, safer streets and new mixed-use developments.
- Backing local businesses through grants, pop-up spaces and support for independent traders serving visitors.
- Improving connectivity between stations, visitor attractions and neighbourhoods via cleaner, more frequent transport links.
- Boosting skills and jobs through training programmes aligned with tourism, events and the wider visitor economy.
| Focus Area | Example Investment | Intended Impact |
|---|---|---|
| City Centre | Night-time lighting and wayfinding | Safer, busier streets after dark |
| Local High Streets | Shopfront and market upgrades | Higher footfall and local spending |
| Transport Hubs | Shuttle links to hotels and venues | Smoother visitor journeys |
| Skills & Careers | Hospitality and events academies | Better-paid, stable local jobs |
Balancing visitor charges with competitiveness and community benefits
Setting a modest, clearly explained charge on overnight stays allows city leaders to secure new revenue without undermining the UK’s appeal as a destination. International visitors are already familiar with similar schemes in major European cities, and evidence suggests that a transparent levy, ring‑fenced for visible improvements, has little impact on tourist choice while strengthening a place’s competitive edge.By tying the charge to targeted investments in transport, cultural venues and public spaces, mayors can turn a small nightly contribution into a strategic tool that supports both the visitor economy and long‑term urban growth.
Crucially, the way the levy is spent must deliver tangible wins for local people and also for visitors. Publishing clear priorities and simple breakdowns of how funds are used helps to build trust and counter perceptions that the charge is a stealth tax. City authorities are already exploring allocations such as:
- Public realm upgrades – cleaner streets,lighting,wayfinding and safer night‑time routes.
- Culture and events – support for festivals, museums and live performance that draw visitors and enrich local life.
- Skills and local jobs – training programmes that help residents access tourism and hospitality careers.
- Transport links – better bus, tram and active travel options serving both tourists and commuters.
| Focus Area | Example Use of Levy | Benefit |
|---|---|---|
| City centre | Street cleaning fund | More attractive high streets |
| Neighbourhoods | Park and play area upgrades | Better family facilities |
| Local businesses | Small grant schemes | Stronger independent sector |
Key steps for councils to design transparent accountable levy schemes
Councils that wish to command public confidence must treat levy design as a shared civic project rather than a back-office exercise. This starts with early, proactive engagement with residents, hoteliers, guest houses and short‑stay platforms to co‑create priorities and test ideas before decisions are made. Open workshops, online consultations and plain‑English explainer pages can show how much revenue is expected, who will be charged, and how exemptions will work. Publishing a simple impact summary-including effects on small businesses, affordability and visitor numbers-helps communities see that risks have been weighed against long‑term benefits such as safer streets, better transport and cleaner public spaces.
- Co-design rules with local tourism and business groups
- Publish data on projected revenue, costs and beneficiaries
- Set clear review points and sunset clauses where appropriate
- Create complaint and appeals routes for levy payers
- Link every pound raised to visible local improvements
| Stage | Council action | Public safeguard |
|---|---|---|
| Design | Draft levy bands and exemptions | Open consultation & published rationale |
| Implementation | Introduce digital reporting for operators | Clear guidance and helplines |
| Monitoring | Track revenue and spending monthly | Regular dashboards and scrutiny meetings |
| Review | Adjust rates or scope if needed | Independent evaluation of outcomes |
Once schemes go live, radical clarity is crucial. Councils can publish easy‑to‑scan online dashboards showing levy income against specific projects-such as upgraded bus routes, new cultural events or enhanced cleaning around transport hubs-so residents and visitors can immediately see where money flows. Embedding regular reporting into existing scrutiny committees, and inviting independent audits or citizen panels, underpins accountability when choices are politically sensitive. Where councils commit upfront to measurable targets-for example, extended library hours or reduced town‑centre vacancy rates-levy payers gain a clear yardstick to judge success, ensuring the charge is seen as a catalyst for local growth rather than a hidden tax.
To Conclude
the proposed levy on overnight stays is less about penalising visitors and more about reshaping how places fund their futures.By giving mayors and local leaders a tool to capture a fraction of the value tourism already generates, the government aims to unlock fresh investment in infrastructure, services and attractions that benefit both residents and guests.
If implemented carefully-transparent in purpose, modest in scale and clearly linked to visible local improvements-the measure could help close funding gaps without overburdening taxpayers. As the plans move from consultation to reality, the test will be whether communities see the promised returns on their doorsteps: cleaner streets, better transport, stronger town centres and more resilient local economies.
