The proposed tourism tax, which could be rolled out across England in less than two years, looks set to be capped at 5 per cent in London.

The levy plans set to be unveiled by Labour will see mayors across the country granted the power to set uncapped overnight taxes in towns and cities - but, according to reports by the BBC, surcharges won't exceed 5% in the capital. 

Both Manchester and Edinburgh already charge tourists, with Scotland and Wales planning to expand their schemes much more widely in 2027.

Tourism taxes have been a fixture in many European destinations for decades, with Austria first introducing one as far back as 1842. Further afield, visitors to many US cities, Mexico and Japan will also find such a levy on their bill when checking out of their accommodation.  

However, until Manchester became the first UK city to enforce a levy on tourists, via its 2023 City Visitor Charge, tourists in England have avoided paying a tax on overnight stays.

London's Mayor, Lord Sadiq Khan said he 'strongly welcomed' the Government's plan this week to follow Scotland and Wales, adding that it 'needs to happen sooner rather than later'. 

Luke Petherbridge, Director of Public Affairs at ABTA – The Travel Association, today criticised the decision to introduce such levies in England, saying it would harm an already beleaguered industry - and urged mayors 'to engage with the sector' before making decisions 

Mr Petherbridge said: 'ABTA believes the introduction of overnight visitor levies across England will further damage the competitiveness of our tourism sector. As such, we are disappointed the government has chosen to proceed with this policy.

'The decision to pursue a percentage-based model, which has already been recognised to be problematic in Scotland, is especially concerning and should be reviewed.

'While we don’t agree with this new tax, should mayors choose to introduce these levies, the money raised from visitors must be put back into improving the services they use and enhancing local tourism offerings.'

So, how does the proposed 5 per cent London cap compare with tourist taxes already established across the UK, and those proposed for 2027? 

MANCHESTER

Prime Minister Andy Burnham introduced a City Visitor Charge while mayor of Manchester in April 2023, charging £1 per night per room plus vat.

The tax is automatically added to bills at check-out, although the tax only applies to larger hotels and serviced apartments with a rateable value of more than £75,000.

Unlike other destinations, such as Edinburgh, there isn't a cap on the number of nights. If you stay for 14 nights, for example, you'll pay for each night, with a bill of £16.80 coming your way.

The tax applies within the Manchester Accommodation Business Improvement District (ABID) zone, which largely covers the city centre and some parts of Salford. 

The first UK city to introduce such a tax, Manchester City Council Chief Executive Joanne Roney said at its launch that the tax would help 'enhance' visitors' experience in the long-term. 

A body, the Manchester Accommodation BID, representing 74 hotels was set up in 2023 to decide on how funding would be spent. 

A year after the introduction of the levy, the mayoral office reported around £2.8million being raised from the levy in the first 12 months, funds which were spent on marketing and street cleaning, according to the mayoral office.

SCOTLAND

Officially launched in Edinburgh on July 24th this year, the Scottish tourism tax has proved just as controversial as England's proposed levies. 

The tax applies to any overnight visitor, regardless of whether they're Scottish or an overseas tourist.  

In Edinburgh, the 5 per cent accommodation surcharge is added to the pre-VAT cost of the first five nights in hotels, self-catering, Airbnb, bed and breakfast, hostels and caravans.

A three-night city centre Premier Inn stay that cost £956 during Edinburgh Fringe this summer would have added a cost of just under £40 in tourist tax.

Next year will see the tourism tax introduced in other destinations, with respective mayors deciding on charges. 

Visitors to Glasgow will pay a 5 per cent levy for every night of their stay, with no five-night cap applied, from January. Meanwhile in Aberdeen, the tax will by 7 per cent and also fully applicable to each night, with the first monies taken in April next year. 

In Stirling, a 3 per cent levy will start in June, capped after seven nights and tourists in the popular Loch Lomond region will pay 5 per cent from July for the full duration of their stay. 

At the scheme's launch in Edinburgh, the Labour-led council said the levy would raise £50million a year for public realm improvements, street cleaning and policing.

Council leader Jane Meagher defended criticism of it, saying: 'Cities and destinations across the world have managed similar schemes for many years. The 5 per cent rate is modest.'

WALES

The Welsh version of the tourism tax, known as the Visitor Levy, will arrive on April Fool's Day next year. 

Local councils can decide if they want to introduce the tax in consultation with both residents and businesses. 

Unlike Scotland's percentage-based model, the Welsh Government plans to base the system on flat-rate per person overnight fees. 

How much will visitors pay? For stays in hotels, B&Bs, and self-catering holiday accommodation, there will be a fee of £1.30 per person per night. Over 18s won't pay the levy. 

A lower rate of 75p per night will apply to hostel shared rooms, bothies, tent pitches and bunkhouses.