The Visitor Levy (England) Bill was introduced in the House of Commons on Tuesday and would let strategic authorities impose a new local tax on stays in residential accommodation, with providers liable to account for it.
Hotels and other accommodation providers would be responsible for accounting for and paying the levy, the government said, and it will give them guidance on how to register, pay and report.
The bill is sponsored by the Secretary of State for Housing, Communities and Local Government, Angela Rayner. Its long title refers to the imposition by strategic authorities of a new local tax in respect of stays in residential accommodation.
The levy must be charged as a percentage of the cost of accommodation rather than a flat fee, so cheaper stays pay less, the government said. It will apply only to the first 28 consecutive days of a stay, as longer stays count as long-term accommodation.
Ten mayors have committed that any levy in their areas would be no higher than 5%. That is a commitment by those mayors rather than a statutory cap, and the government has said it does not intend to set a national cap on the rate.
Authorities wanting a levy must first publish a draft plan and an impact assessment covering the expected effect on the local economy, businesses and visitors, the proposed rate, threshold, exemptions and spending. They must then consult local people and businesses and seek agreement within their strategic authority.
After that they must consider the views, publish the responses and issue final versions of both documents. In Foundation Strategic Authorities, a levy can go ahead only with unanimous support. Authorities with a levy must publish an annual report on what they raise and spend.
National exemptions cover student accommodation, care homes, children’s homes and school boarding houses. Temporary accommodation, shelters and refuges will not be charged. Local leaders can add limited exemptions, such as camping pitches.
Occasional hosts, such as people who rent out a spare room from time to time, will pay only if they earn above a set amount, which mayors and local leaders can adjust.
On enforcement, the government said strategic authorities will help providers get it right and it will be up to local leaders how they use their enforcement powers proportionately. It described these as standard tax powers, in line with those for national self-assessed taxes.
Rayner said the aim was “giving mayors and local leaders the choice to invest back into what matters most to local people, while protecting lower-cost stays and making sure businesses have their say.”
The design follows a consultation that the Ministry of Housing, Communities and Local Government and HM Treasury opened on 26 November 2025. It closed on 18 February after 12 weeks, with 1,223 responses, of which 365 (30%) came from the accommodation and bookings sector.
Respondents were not uniformly in favour of the final design. In the government’s response, 60% (726 of 1,223) opposed a percentage rate model, and 53% (651) opposed extending levy powers to foundation strategic authorities. The government nonetheless decided that all mayoral and foundation strategic authorities will have the powers.
The government said it will continue to engage with accommodation providers on technical design, including the duty to keep records of levy payable. It expects local leaders to be able to set out plans for how revenues will be invested by March 2028, subject to parliamentary approval.
Kumar Mishra, chair of the Manchester Accommodation BID, said: “The key for an Overnight Visitor Levy in Greater Manchester will be working closely with accommodation businesses to ensure any future levy is designed well, complements what is already working and delivers clear benefits for the businesses and places that generate it.”
In Greater Manchester, a £1 per room per night charge through the Business Improvement District introduced in 2023 raised £2.8m in its first year, the government said. Liverpool City Region’s mayor, Steve Rotheram, said a modest levy there could potentially raise up to £18m a year.