Tourist Tax to Be Introduced in London

By Mirko Zara | 15 December, 2025

Worried about how London’s new tourist tax is going to affect your Airbnb, with visitors being charged extra for stays?

Rachel Reeves is expected to grant London Mayor Sir Sadiq Khan the authority to introduce a levy on overnight stays under a new tourist tax, which would charge any overnight visitors (whether in hotels, short lets, or Airbnb-style accommodation) an additional fee.

Earlier in 2025, Sir Sadiq Khan made the case for introducing a tourist tax, arguing that visitors to European cities do not mind paying “an extra few” euros, and that a London tourist tax could raise an additional £250 million a year.

Cities like Lisbon, Barcelona, Prague and Paris already have a tourist tax, with Paris charging 3.25 euros (£2.86) for an overnight stay in a two-star hotel and 8.45 euros (£7.43) for a four-star hotel.

The money brought in by tourist tax is expected not to go towards public services in the city, but rather to make London (already one of the world’s most fantastic tourist attractions) an even more attractive place to visit.

But could it hurt tourism instead of encouraging it?

“We don’t comment on speculation, but the Mayor has been clear that a modest tourist levy, similar to other international cities, would boost our economy, deliver growth and help cement London’s reputation as a global tourism and business destination.” A spokesperson for the Mayor of London said.

But that’s not how the industry feels or reacts to the news. UKHospitality, the trade body for hospitality in the UK, slammed the tourist tax plans as “shocking”, warning they would “only serve to ramp up prices and drive inflation”.

There are more than 100,000 holiday rentals listed on Airbnb in London, with 10,500 in Westminster alone.

West End chiefs have said that the lack of VAT-free shopping for foreign visitors (a tourist tax of its own) and visa costs actually drive tourists to cities like Paris or Milan instead. But they do support an overnight levy if worked out properly.

It’s not only coming to London

• In Scotland, Edinburgh and Glasgow plan to introduce a 5% tourist tax next year, and Aberdeen intends to introduce a 7% tourist levy.
• Wales has also passed a law allowing councils, from 2027, to opt in to a nationally consistent levy of £1.30 per person for hotel stays and 75p per adult for hostels and campsites.

How Airbnb owners might be affected

This change might have a domino effect on Airbnb owners in London, but the impact will boil down to how it’s designed, who has to collect it, and whether you can pass it cleanly to guests without hurting conversion.

We will also have to see how visitors react to the charges and whether they affect travel numbers. But because cities like Paris have not seen a meaningful drop in visitor numbers due to the tourist tax, we can expect demand to remain consistent.

When tourists already spend thousands on flights, accommodation, food and attractions, an extra £1–£5 per night barely registers. Plus, guests don’t feel the charge in the same way; they’ll notice higher nightly rates.

What to do next

• Don’t panic-adjust prices yet (nothing is live until London sets its actual scheme)
• Make sure your pricing strategy can absorb small shocks
• If you’re multi-channel, tighten rate parity and fee clarity so one channel doesn’t look “more expensive”
• If you manage multiple units, start thinking like Edinburgh/Wales models: per-night accounting, caps, exemptions

If you’re concerned about the 90-Day Rule, contact the Airbnb management company Ovitzia for help with compliance and revenue-boosting strategies.