London mayor: tourist accommodation levy will not exceed 5%
In London, United Kingdom, the tourist overnight levy will not exceed 5% of the cost of accommodation, city Mayor Sadiq Khan said. The exact rate has not yet been determined. As ABC News Australia reports, citing the BBC, Khan supported government plans to grant the relevant powers to local authorities.
Who the levy may apply to
The proposed rules will give local authorities the option of charging domestic and foreign guests a fixed amount or a percentage of the cost of an overnight stay. The levy may apply to hotels, guesthouses, bed and breakfast establishments, hostels, campsites, self-catering accommodation, short-term rentals, as well as university and religious accommodation rented out on commercial terms.
Mayors will be able to provide for local exemptions and introduce the levy only in certain areas of their jurisdiction. Members of a combined local authority will have the right to reject such a decision by a two-thirds majority vote.
The legal basis for this is to be created by a bill on a levy for overnight visitors, which had not yet been introduced to parliament at the time of publication. The government held consultations on the mechanism of such a levy from November 2025 to February 2026.
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What the revenue may be used for
According to Khan, London should receive powers similar to those in effect in New York, Los Angeles, Chicago and Paris. He said the city should invest in maintaining its attractiveness.
The bill provides for the possibility of spending the revenue on initiatives that positively affect the regional economy, including transport, urban regeneration and cultural sites. The government will not require mayors to introduce the levy and will not cut their funding if they decline to do so.
According to an estimate by Central London Forward, which represents 12 London local authorities, a levy of 3% of the room cost could generate up to £240 million in revenue annually.
