London is preparing for one of the biggest changes to its tourism landscape in years: a new tourist tax that would apply to overnight stays in hotels, B&Bs, and short-term rentals like Airbnb. The proposal comes from the Greater London Authority’s (GLA) Oversight Committee, which argues that London needs additional revenue to maintain and improve public services heavily used by tourists.

While the plan has sparked debate, it has also gained significant political momentum. Here’s a clear and comprehensive breakdown of how this tax would work, why it’s being proposed, and when it might be implemented.

Why Is London Introducing a Tourist Tax?

London attracts over 30 million visitors each year, putting huge pressure on its transport system, public spaces, and local services. A growing number of cities globally like Paris, New York, Amsterdam, Barcelona, and Rome already charge visitor levies to help maintain infrastructure.

Mayor Sadiq Khan has publicly supported the idea, saying a “modest tourist levy” would boost London’s economy and enhance its global reputation by reinvesting revenue into the city.

A spokesperson from City Hall also stated:

“A modest levy, similar to other global cities, would help deliver growth and support tourism in the capital.”

How Would London’s Tourist Tax Work?

London is considering a 5% tax on the cost of overnight accommodation. The exact format is still under discussion, but based on current proposals, here’s what visitors can expect:

Percentage-Based Levy (Most Likely Option)

• A 5% charge on the price of a hotel, hostel, B&B, or Airbnb stay.
• If the average hotel room costs around £230 per night, the tax would add about £11.50.
• For Airbnb and budget accommodations, the extra charge may be around £8–£10 per night.

This brings London in line with European cities like Edinburgh, Berlin, Paris, Rome, Amsterdam, and Barcelona all of which already apply tourist levies.

International Comparisons

• New York City raises £493 million a year from its combined hotel and visitor taxes.
• Tokyo charges a flat-rate fee and collects £35 million annually.
• Edinburgh will introduce a 5% tourist tax from July next year.
• Many Italian and French cities charge per-night fees based on star rating and location.

London’s estimated yearly revenue from the levy could reach £240 million, according to the think tank Centre for Cities.

Where Will the Money Go?

The GLA committee recommends the revenue be “ring-fenced”, meaning it can only be used for:

• Public transport improvements
• Waste management and street cleaning
• Tourism infrastructure
• Cultural preservation
• Safety and policing in busy visitor zones
• Enhancing parks, museums, and city attractions

This ensures the funds directly support services used by tourists, instead of disappearing into general government spending.

Why Is the Tax Controversial?

Although many support the idea, there is strong resistance too.

Supporters Say:

It provides a much-needed revenue source for London
It is common in major global cities
Visitors contribute fairly to the services they use
It strengthens local government’s financial independence

Opponents Argue:

It could discourage some tourists, especially budget travellers
London is already an expensive city
Hotels and Airbnb hosts may face additional administrative burden
The hospitality sector fears it could slow down visitor growth

Some boroughs, including Westminster and Southwark, welcome the tax. Others think it may affect tourism numbers.

When Will London’s Tourist Tax Be Introduced?

Currently, England is the only G7 country where local governments cannot implement their own tourist taxes without national approval.

That may soon change.

Chancellor Rachel Reeves is expected to grant mayors like Sadiq Khan the authority to introduce the levy through the English Devolution and Community Empowerment Bill, which is now progressing through Parliament.

A formal announcement is expected within the next few months, and the tax could be implemented as early as next year once the bill becomes law.

What This Means for Visitors

If you’re planning a trip to London:

• Expect an additional 5% added to your nightly stay cost.
• This applies whether you’re staying in a luxury hotel, budget hostel, or Airbnb.
• The fee will likely be automatic at checkout similar to how other cities charge their levies.

For most travellers, the extra cost is small but helps support a cleaner, safer, and better-managed city.

London’s proposed tourist tax reflects a broader shift toward sustainable tourism funding. As cities welcome millions of visitors every year, they’re increasingly adopting small levies to protect infrastructure and local services.

If implemented thoughtfully with transparency and fair rates London’s tourist tax could help generate hundreds of millions in revenue without significantly discouraging visitors.

This is not just a tax it’s an investment in the future of one of the world’s greatest cities.