England's tourism levy: What it means for short-term rental hosts and property managers

The UK government is set to hand regional mayors the power to introduce a nightly tourism levy – a "tourist tax" – on overnight stays in England, including short-term rentals. For STR hosts and property managers, this brings new pricing, compliance, and competitiveness questions. Here's what's proposed, who it affects, and how to get ahead of it.

What is the tourism levy?

A tourism levy (also called a visitor levy or tourist tax) is a small charge added to overnight accommodation, typically calculated per room or per person, per night. Under plans reported this week, English mayors would gain devolved powers to introduce their own levy in their areas – bringing England into line with Scotland and Wales, where visitor levy legislation is already in motion, and with dozens of European city destinations that have charged tourist taxes for years.

Crucially for our sector, the reported scope isn't limited to hotels. Short-term lets – Airbnbs, holiday cottages, serviced apartments, and self-catering properties – will fall within scope. That means the levy is squarely a short-term rental issue, not just a hotel one.

Why a tourism levy matters for short-term rental hosts

For hosts and property managers, a levy introduces friction in three areas that directly affect your bottom line:

1. Price competitiveness. Every pound added to the guest's total nudges your effective nightly rate upward. In price-sensitive markets – family holidays, shoulder-season bookings, budget-conscious short breaks – even a modest levy can tip a guest towards a cheaper destination or a longer gap between trips.

2. Collection and remittance. Someone has to collect the levy, account for it, and pass it to the local authority. If platforms like Airbnb and Booking.com automate collection, this may be relatively painless for some hosts. Where they don't – particularly for direct bookings – the admin burden lands on you.

3. Compliance risk. A patchwork of mayor-by-mayor schemes means the rules could differ from one city to the next. Property managers operating across multiple regions may find themselves navigating several levy regimes at once, each with its own rate, exemptions, and reporting requirements.

The sector's response: Get the design right

Industry bodies have broadly signalled that a levy can work – but only if it's designed with real trading data, not assumptions. The Short Term Accommodation Association (STAA) has called for genuine partnership between local leaders and the accommodation sector.

Janet Uttley, Chief Executive of the STAA, said: "With new tourism tax powers being handed to mayors, this is an important moment for our sector. We want to work in partnership with local leaders to ensure any levy supports affordable family holidays, protects already-stretched small accommodation providers, and keeps business travel viable for the organisations that drive regional growth.

"Getting the levy design right matters. We encourage local authorities to speak with their tourism destinations – and talk to us – so decisions are grounded in real trading patterns rather than assumptions, supported by proper economic impact and price-elasticity assessments before any final approach is set.

"We stand ready to support leaders across the country with data, insight, and sector expertise. A well-designed levy can work, but only when built on facts, partnership, and a clear understanding of its true impact."

That framing matters. A levy set too high, or applied bluntly to small providers already squeezed by rising costs and regulation, risks dampening the very visitor economy it's meant to fund.

How hosts and managers can prepare now

You can't control policy, but you can reduce its impact:

• Model the impact on your rates. Run the numbers on how a per-night charge affects your total guest price and your conversion in price-sensitive segments. Your dynamic pricing strategy may need adjusting.

  
  

• Tighten your systems. A robust PMS makes levy collection, record-keeping, and multi-property reporting far less painful. If you're managing at scale, automation is your friend.

  
  

• Communicate clearly with guests. Surprise charges damage reviews. Be transparent about the levy up front so it never lands as a checkout shock.

  
  

• Make your voice heard. Engage with local consultations and support sector bodies like the STAA and PASC UK. Levy design is being decided now – real operator data is what keeps it proportionate.

  
  

FAQs

Will the tourism levy apply to Airbnb and short-term rentals? Yes – reported plans include short-term lets alongside hotels, so hosts and property managers should expect to be in scope.

Who decides the rate? Under the proposals, regional mayors would set and apply the levy locally, meaning rates and rules could vary by area.

When does it start? Timing is still to be confirmed as the powers are formalised. We'll update this article as details are announced.