Consultation on Overnight Visitor Levy in London
Following the Budget announcement that mayors in England may be granted powers to introduce a new Overnight Visitor Levy (often referred to as a “tourist tax”), the Government has launched a consultation on how this policy could operate.
The proposals would give Mayoral Strategic Authorities a discretionary power to apply a charge to short-term accommodation. In London, any decision on whether to introduce such a levy would rest with the Mayor and the Greater London Authority (GLA). The Mayor of London has publicly stated that he plans to introduce a tourist tax in London once the necessary legislation has been passed by Parliament.
Under the Government’s proposals, the levy would apply to all commercially let short-term accommodation, including hotels, B&Bs, hostels, self-catering properties and short-term lets. The charge would be applied in addition to VAT and existing local charges. The Government’s preferred approach is a percentage-based levy linked to the cost of accommodation, with discretion for Mayors to vary rates, introduce exemptions or caps, or set a zero rate where appropriate.
Accommodation providers would be legally responsible for calculating, collecting, and remitting the levy which raises questions around administrative burdens, compliance and cost, particularly for small and medium-sized enterprises.
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