London tourist tax on accommodation will be capped at 5pc, mayor says

The Mayor of London has confirmed that a proposed tourist tax on accommodation will be capped at five per cent, following milestone legislation unveiled by the British government this week. The new legal framework empowers local authorities to impose either a flat fee or a percentage-based levy on overnight stays, impacting both domestic travellers and international guests frequenting the UK capital’s hotels and short-term rentals.

This fiscal shift aligns London with several other major global destinations that already utilise visitor levies to bolster municipal budgets and infrastructure. While the move is designed to generate essential revenue for public services, it has sparked a rigorous debate within the hospitality sector regarding the potential impact on the city’s post-pandemic recovery and its long-term competitiveness as a premier global hub.

“This levy represents a delicate balancing act between essential urban reinvestment and the risk of dampening the city’s appeal to cost-conscious global travellers in an increasingly crowded market.”

Industry stakeholders are now closely monitoring how the revenue will be ring-fenced for local improvements, as the five per cent ceiling provides a definitive boundary for future pricing strategies. As the legislation moves forward, the focus remains on ensuring that the additional cost does not discourage the high-value tourism that remains a cornerstone of the London economy.