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Tourist Tax And Visitor Levy In London 2026
London has no tourist tax today, but that is about to change. Here is exactly what is confirmed, what is still undecided, and what it means for hotel operations.
September 12, 2026
7
min. read
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TL;DR
- No tourist tax currently applies to hotel stays in London as of September 2026.
- On 10 September 2026, the UK government confirmed that mayors in England, including London's, will get the legal power to introduce a visitor levy.
- London Mayor Sadiq Khan has said any levy he introduces would not exceed 5% of the accommodation cost per night.
- The levy would be calculated as a percentage of room price, not a flat per-room fee like Manchester or Liverpool charge today.
- VAT would apply on top of the levy-inclusive total, meaning the levy itself becomes part of the taxable amount rather than sitting outside it.
- City Hall estimates a 5% levy could raise around £240 million a year for London if introduced at the maximum rate.
- Expected coverage includes hotels, guesthouses, bed and breakfasts, hostels, campsites, self-catering stays, and short-term lets, though nothing is finalized.
- No confirmed start date exists yet. The government still needs to pass enabling legislation before London (or any other English mayor) can actually set a rate.
How London's Proposed Visitor Levy Would Work
London's situation is different from every other city in this guide because nothing is law yet. What changed on 10 September 2026 was a national policy announcement, not a local ordinance. The government confirmed it will give directly elected mayors in England, including the Mayor of London, the legal authority to introduce a visitor levy in their region. It will not be mandatory and it will not be set nationally. Each mayor decides independently whether to introduce one at all, and if so, at what rate up to whatever cap Parliament eventually writes into law.
Sadiq Khan responded by publicly committing to a ceiling: any London levy would sit at or below 5% of the accommodation price per night. That is a political commitment, not a legislated number. The actual mechanism proposed is percentage-based, similar in structure to Edinburgh's approach and unlike the flat per-room charges used in Manchester, Liverpool, and Bournemouth. A percentage-based levy scales with room rate, so a £500-a-night hotel would generate a proportionally larger charge than a £90-a-night budget stay, unlike a flat fee that charges both the same amount.
Where Things Stand: Confirmed Versus Still Undecided
Collection and Remittance (Expected Model)
The government's own framework documents point to the same collection model already used in Scotland and Wales: the accommodation provider, not the guest directly, is responsible for charging the levy at the point of booking or checkout and remitting it to the local authority on a regular cycle. For London specifically, that would most likely mean remittance to the Greater London Authority or a mayoral-designated body, though the exact administrative route has not been published.
The VAT interaction is the detail hotels most often miss when a new levy is proposed. Because the levy would be added to the room charge before VAT is calculated, VAT ends up payable on the levy amount itself, not just on the underlying room rate. On a £200 room with a 5% levy, that adds £10 to the taxable base before VAT is applied, not after.
How London Compares to Edinburgh, Manchester, and Cardiff
London's proposed levy sits closer to Edinburgh's model than to Manchester's or Liverpool's. Edinburgh and Cardiff both use a percentage-of-price or per-person-per-night structure created by dedicated national legislation (the Visitor Levy (Scotland) Act and the equivalent Welsh Act), administered by the local council. Manchester, Liverpool, and Bournemouth instead run Business Improvement District charges, a hotel-industry-voted mechanism with no underlying national tax law behind it, which is why those three could go live years before London or any other English mayor gets the legal power to act. London's levy, once it exists, would be a true statutory local tax rather than an industry-run BID charge, which is a meaningful legal distinction for how disputes, exemptions, and enforcement work.
Common Mistakes Hotels Could Make Preparing For This
- Assuming nothing has changed: The 10 September 2026 announcement is a real shift, even though no rate has been set. Waiting for a final number before doing any planning means starting from zero when the deadline is finally announced.
- Forgetting the VAT-on-levy stacking: Any percentage-based levy that is added before VAT calculation raises the total tax burden more than the headline rate suggests. Budgeting on the levy rate alone understates the true guest-facing cost increase.
- Configuring only for a flat per-room fee: Hotels that operate in both London and a BID city like Manchester will need two different tax structures in the same portfolio: one percentage-based, one flat-fee. Systems built around only one model will need updating.
- Ignoring borough-level variation risk: Scotland's rollout shows individual councils (Edinburgh live from July 2026, Glasgow from January 2027) adopting the same national framework on different timelines and, potentially, different rates. There is no guarantee every part of Greater London would move at the same pace or under identical rules if the mayor delegates any local flexibility.
- Waiting to update guest-facing pricing and disclosure: Whenever the levy does land, guests will expect to see it itemized clearly, not folded silently into a higher room rate. Properties that bury it risk complaints and chargebacks.
Where A PMS Fits Into Visitor Levy Readiness
London's levy will be percentage-based and VAT-interactive, which is a materially different configuration challenge than a flat per-room fee. A property management system needs to support tax rules that recalculate dynamically off room rate, apply VAT on the levy-inclusive total rather than the room rate alone, and itemize the charge separately on the guest folio so it is transparent rather than absorbed into a single line. For a multi-property operator running London alongside a BID city like Manchester or Liverpool, that means running two entirely different tax logics side by side without manual workarounds. roommaster's tax and rate configuration is built to hold jurisdiction-specific rules like this at the property level, so when London's rate is finally confirmed, it is a configuration change rather than a system overhaul, and remittance-ready reporting is already there when the first filing deadline arrives.
See how roommaster simplifies multi-property tax reporting.
Frequently Asked Questions
1. Is there a tourist tax in London right now?
No. As of September 2026, London has no tourist tax or visitor levy in effect. The government has only confirmed that the Mayor of London will gain the legal power to introduce one.
2. How much will London's tourist tax be?
No official rate has been set. Mayor Sadiq Khan has said any levy he introduces would not exceed 5% of the accommodation cost per night, but that is a public commitment, not a legislated figure.
3. When will London's tourist tax start?
There is no confirmed start date. The national government still needs to pass enabling legislation before the Mayor of London can set and introduce an actual rate.
4. Will VAT apply on top of London's tourist tax?
Yes, based on the government's published framework. VAT would be calculated on the total accommodation price including the levy, not on the room rate alone.
5. What types of accommodation will the tax apply to?
The proposed scope covers hotels, guesthouses, bed and breakfasts, hostels, campsites, self-catering properties, and short-term lets, though the final list has not been confirmed.
6. Is London's tourist tax the same as Edinburgh's visitor levy?
No. Edinburgh's levy already exists under separate Scottish legislation and is live from July 2026. London's levy is still pending the UK government enabling legislation and mayoral decisions.
7. How can hotels prepare before the rate is confirmed?
Review whether your tax configuration and reporting systems can handle a percentage-based, VAT-inclusive charge, since that structure differs from the flat per-room fees used in cities like Manchester and Liverpool. Getting that groundwork in place now avoids a scramble once a rate is announced.
