The Government is set to confirm a new tourist levy on overnight stays in cities across England later today.

The UK Government is preparing to give Sadiq Khan and other local leaders the power to introduce a mandatory “tourist tax” on overnight stays in cities across England. The policy is expected to be unveiled on Tuesday, ahead of Rachel Reeves’ first Budget on 26 November.

Khan has been pushing for greater control over city taxes in recent weeks, as the English Devolution and Community Empowerment Bill continues its path through Parliament. Under the new plan, councils would be able to charge visitors roughly £2 per night, applying to both hotels and short-stay rentals such as Airbnb. The exact rate will be finalised after consultation.

Unlike voluntary schemes used by some English cities today, this would be a formal local tax. Similar visitor levies already exist or are being introduced in parts of Scotland and Wales, and are standard in major tourist destinations across Europe and the US.

Hospitality groups have criticised the proposal, warning it could put people off taking city breaks in the UK by adding extra costs for domestic travellers. However, London alone recorded 89 million overnight stays in 2024, and research from the Centre for Cities suggests the impact on visitor numbers would likely be small.

Andrew Carter, the think tank’s chief executive, said a well-designed levy could actually strengthen London’s tourism sector if the money is directed to local authorities, ideally shared between City Hall and the boroughs, rather than controlled by central government.

The Treasury has not yet commented on the plans.