Visitor levy in England

The LGA exists to strengthen local government, so communities thrive. This means championing and being the voice of local government, ensuring it has the resources, powers and support to deliver the best possible outcomes.

This response has been approved by the LGA’s Chair and Group Leaders, following consultation with Local Government Resources Committee Lead Members and the Culture, Tourism and Sport Committee.

The LGA seeks to operate on a cross-party consensus. The LGA’s support for the introduction of an overnight visitor levy is the majority position of the LGA. The LGA Conservative Group has highlighted its objections to this policy within the organisation on consecutive occasions.

Before addressing the consultation’s specific questions, there are several key points that are important to make.

Question 1: Should the power to raise a visitor levy also be extended to Foundation Strategic Authorities?

Yes.

The LGA agrees that the power to raise a visitor levy should also be extended to Foundation Strategic Authorities and where these do not exist, to the relevant local authority. Without this the LGA is concerned that areas without a Mayoral Authority could experience an even greater gap in devolved powers. 

Nearly a third (29 per cent) of England’s population is without any strategic authority and not part of the Devolution Priority Programme. Therefore, flexibility is needed from the Government in the governance requirements, so that these areas can benefit from the additional funding raised by a levy.

Question 2: Do you agree that Mayors should be able to invest the revenues from a levy in interventions to support economic growth, including the visitor economy?

Yes.

The LGA agrees that revenues from a levy should be invested to stimulate growth in the visitor economy locally. Whilst we generally advocate for flexibility over how funding is spent, income from the levy should be spent on activities that benefit or support tourism businesses and visitors. This should include attractions for visitors like large events and culture, heritage, and transport services. 

Councils must retain a portion of the funding raised to support the services they provide which serve the visitor population. This include where services like parks, waste collections, and public toilets for example, are under more pressure from high visitor numbers. Thought will be needed to consider how funding from the levy can be passed to parish councils in areas where they are responsible for these services. This will ensure that the destinations and the communities that bear the cost of welcoming and hosting visitors are supported. 

Reporting requirements on local government should not be more onerous than is necessary for stakeholders to understand how funding has been spent in the local economy and on local services. 

Funding raised through the levy should be retained locally – and should sit outside of core spending power. The introduction of the levy should not act as the basis for government to withdraw existing support to leisure, heritage and tourism service.

Question 3: Should a share of revenues for local authorities be allocated on the basis of the proportion of overnight stays in the authority or some other centrally defined metric, or should the distribution within the area be determined entirely by Mayors and other local leaders?

The LGA believes that council leaders and mayors are best placed to determine how the revenues are allocated and spent in their areas. As local leaders, they will need to work pragmatically when deciding how to allocate funding across a strategic authority area. For example, many port and airport facilitate visitors travelling elsewhere but visitors often do not stay overnight. Therefore, mayors and councils would need to agree to invest in infrastructure to support visitors travelling through these key areas.

Some areas experience a high number of day visitors, where they are either on route to another destination or staying outside the local area, as is common in Bath for example. 

Question 4: Do you agree that all overnight stays in commercially let visitor accommodation should be within scope of a levy, unless otherwise exempted within the national scheme or by Mayors

Yes.

This a sensible starting point for the levy’s scope, which local areas are free to adapt to reflect their local communities and the scale of the local visitor economy. The national scheme for the levy should therefore include all commercially let visitor accommodation, unless otherwise exempted. 

Question 5: Should the government introduce a threshold below which providers are not liable for a levy? If so, what form should this take? Please provide evidence for why any suggestions should be considered.

No.

Council leaders and mayors are best placed to determine if the levy should not be applied to certain accommodation types or providers. Local decision-makers will have a stronger insight into the local accommodation market than national government. By engaging these businesses, local leaders will be able to understand if some providers should be exempt from the levy. 

Question 6: Do you agree that the following exemptions should apply at a national level? Please provide details for why any additional exemptions should be considered.

Yes.

The LGA supports the proposed exemptions. It is important that critical support for people in shelter, respite and care is not made more expensive as a result of the levy. It should be for leaders and mayors to decide if any further exemptions are required in their areas to protect public services.

Question 7: Do you think that Mayors and other local leaders should have the power to introduce additional local exemptions to those outlined nationally? Please provide examples of specific exemptions, and evidence for these.

Yes.

Local leaders should be empowered to introduce any local exemptions to reflect local circumstances. We would not support the Government setting out a defined list of possible additional exemptions, from which local areas can choose. Local areas should be able to adopt any local exemptions as long as these are easy to understand and enforce. 

Question 8: Do you agree that a levy should be set as a percentage of accommodation costs?

The LGA believes that local leaders are best placed to decide on the model and level that best suits their own local area and that flexibility is key to the success of the scheme. Areas should be free to decide on a percentage or a flat rate model.

Question 9: How should a percentage-based levy be applied to inclusive packages where accommodation is only part of the total cost (for example, packages that include meals, entertainment, or transport)?

The LGA believes that Guidance should be provided to enable local decision makers to make these decisions for their areas.

Question 10: Do you agree that Mayors and other local leaders should have the flexibility to set levy rates locally?

Yes

The LGA agrees that council leaders and mayors should have the flexibility to set the most appropriate and sustainable rate for their area.

Question 11: Should the government put in place a cap on the maximum tax rate? If so, at what level should a cap be set? Please provide evidence in support of your views.

No.

The LGA believes that local decision makers are best placed to make these decisions based on local data on visitor spending and the views of local businesses in their own area.

This is a majority position of the LGA and the Conservative Group does not support the LGA’s line on this 

Question 12: Should the government put in place a limit on the maximum number of consecutive nights to which a levy applies? If so, at what level should that limit be set? Please provide evidence in support of your views.

No.

The LGA believes that local decision makers should have the flexibility to make these decisions based on data and evidence from their local area.

Question 13: Are there any other flexibilities or safeguards that should be built into the rate-setting scheme?

The LGA believes that it is for councils and mayors responsible for delivering visitor economy services to use their discretion to make these decisions locally. This is consistent with our calls to allow local areas as much flexibility as possible to determine what is appropriate for their area.

There is currently an inconsistent picture across England with councils going through local government reorganisation and Mayoral Strategic Authorities being established at different times.

Question 14: Should Mayors and other local leaders have powers to vary the rate for different types of accommodation, including short term lets?

Yes.

The LGA believes that local decision makers are best placed to make decisions about their local area and should be afforded the flexibility to vary the rate for different accommodation types accordingly. This would enable areas with a high level of short-term lets (STLs), including student accommodation when being rented to visitors, to design a levy scheme which reflects this.

Question 15: Do you agree that Mayors should have the flexibility to decide whether the levy applies to different constituent authorities within their region?

The LGA believes that local decisions should be taken by mayors and council leaders working closely together, using their judgment and local knowledge to decide whether visitors affect all of their region to the same degree. 

Question 16: Should Mayors and other local leaders be able to vary the application of a levy in their areas based on, for example, seasonality? Please provide details of any other flexibilities that should be considered.

Yes.

The LGA believes that local leaders have the relevant local knowledge and are best placed to make decisions that affect them. They should have as much flexibility as possible to ensure that any scheme is most appropriate for their area. 

Question 17: Do you agree that a formal consultation process conducted by Mayors and, if powers are extended to them, Foundation Strategic Authorities should be required before a levy is introduced and that this approach is proportionate?

Yes.

The proposed consultation requirements and the list of proposed consultees are sensible. It is right that relevant accommodation providers, tourism organisations and local businesses are at the heart of this engagement.

Question 18: Do you agree with the proposed components of the prospectus?

Yes.

The proposed requirements for consultation are fair to ensure that anyone paying the levy clearly understands its purpose and how it will be implemented.

It would be sensible for the prospectus to include how the levy will be collected and how payment will be enforced. This is currently required before a ballot on an ABID levy can take place, therefore it would be sensible for this to be mirrored in the system for the visitor levy.

Question 19: Do you think that the proposed length of the notice period of 12 months is appropriate

No.

We believe that the requirement to wait for 12 months may be too long and could mean some areas will not be able to introduce the levy before the end of this Parliament, as primary and secondary legislation will be required.

Question 20: Do you agree that introduction of a levy, and any subsequent changes to the core elements of a levy, should be subject to the relevant statutory Mayoral budget voting process in MSAs?

Question 21: If Foundation Strategic Authorities have powers to introduce a visitor levy, do you agree that a simple majority council vote should be required ahead of consultation on a levy, ahead of implementation and this be repeated ahead of any changes to the core elements of a levy? Is this approach fair and proportionate?

Question 22: If Foundation Strategic Authorities have powers to introduce a visitor levy, what are your views on the consent mechanism in Foundation Strategic Authorities where a levy is applied to a smaller area within the Foundation Strategic Authorities’ geography?

Question 23: What further or different governance and accountability mechanisms are needed in Foundation Strategic Authorities, Mayoral Strategic Authorities or the Greater London Authority? Enter your preferred approach

We have combined these questions. 

The proposals set out are sensible and proportionate. This should ensure that all constituent authorities have a say in whether a levy is introduced. 

The levy and any changes should then be linked into the regular cycle of budget setting and medium-term financial planning. Any further questions on the governance around this should be left for local determination, provided that there is joint decision-making on the levy between councils and mayors in the strategic authority. 

Question 24: Do you agree with the proposed approach to reporting, and should any further accountability mechanisms be considered? 

We agree with the proposed reporting requirements as sufficient to provide clarity to accommodation providers and local residents. Any further reporting requirements would increase the burden on local authorities. 

Question 25: Do you agree that it should be the visitor accommodation provider that is ultimately liable?

The LGA does not have any view on this question.

Question 26: How could digital booking platforms or intermediaries best be integrated to streamline levy assessment, collection and tax returns?

The LGA would welcome online platforms supporting small businesses by collecting payments and reporting occupancy, to reduce the administrative burden on small businesses. This would support councils and businesses to administer the levy.

Question 27: Do you agree that a self-assessed model is the most appropriate approach for administering a visitor levy?

Yes.

The LGA agrees with this proposal, which is in line with practise in Scotland and Wales.

Question 28: Do you agree that the tax point of a levy should be the point of arrival?

Yes.

This is a sensible approach to introducing the levy, which should prevent accommodation providers from paying the levy if a booking falls through, however we maintain that the booking platforms should support local businesses by taking responsibility for the necessary administration. The Government will need to consider how applying the levy at the point of arrival will match with most online bookings being paid in advance.

Question 29: In your view, should levies be administered locally by relevant authorities, through a centralised approach, or a combination of local and central authorities?

Relevant local authority.

The LGA’s view is that:

• councils are best placed to collect this and remit it to other local authorities. They already have the expertise and relationships required from collecting local revenues. Councils are the most natural place for this function to sit, compared with strategic authorities or with central government. This would also prevent unnecessary duplication of systems which already exist in councils.
• a ring-fenced account for councils to hold any levies in, similar to the collection fund, would be logical. However, care must be taken to ensure this does not introduce unnecessary complexity into local authority accounts.
• there is an opportunity to learn from existing ABIDs: In areas with an existing ABID, councils bill accommodation providers according to the level of occupancy reported by these providers. This could therefore be a sensible model to follow for the visitor levy. However, the introduction of a levy set at a percentage of a total accommodation costs will make collecting information from accommodation providers and billing them more complicated. Therefore, the LGA and councils are keen to work with the Government to consider how if it is feasible to use existing software and procedures to administer the visitor levy.
• delivering the levy will require an increase in capacity in councils. The inclusion of short term let operators, who do not currently pay business rates and sit outside of existing ABIDs, will require additional engagement and resourcing from councils. Local areas should be free to decide on an alternative approach to collection, such as one authority in an area collecting the levy on behalf of all others.

Question 30: Do you agree a portion of levy revenues should be retained by the relevant authorities to fund administration costs, if levies are administered locally?

Yes.

No council should face an unfunded new burden from collecting the levy locally, so they should be compensated for all costs associated with administering the levy. This must cover the cost of the required activity for compliance, monitoring, billing, stakeholder engagement, and reporting.

Question 31: Should the registration process for accommodation providers to support the administration of the visitor levy be operated locally or nationally alongside the registration scheme for short-term lets in England?

Locally.

The registration process for the providers to pay the levy should be operated locally. This would utilise the existing knowledge and oversight of businesses within councils which would make delivering registration, compliance, and enforcement functions easier. Furthermore, as implementation of the visitor levy is optional, introducing a national registration scheme could create unnecessary pressure on businesses if local areas do not opt to introduce a levy.

However, as many STL operators do not currently pay business rates, it is vital that the proposed mandatory national registration scheme for STL is operational is soon as possible. This is necessary so that local authorities can actively engage these ST operators to prepare them for collecting and reporting the levy. 

Question 32: What processes or solutions for collecting revenues could be introduced to minimise the burden on businesses? Enter your preferred approach

Question 33: What further support could reduce the administrative burden on businesses in collecting and remitting a levy? Enter your preferred approach

We have combined these two questions.

If the Government decides to follow a similar model to existing ABIDs, it should consider how to streamline the process for providers to report occupancy levels and related income. The Government should also work with local authority software providers to explore integrating this platform with council billing systems to reduce unnecessary burdens. 

Any effort to reduce burdens on business should not lead to unnecessary burden to local authorities collecting the levy.

Question 34: Tax authorities will require enforcement powers to ensure compliance with a levy. Do you agree with the powers listed?

Question 35: Do you agree that an appeals process should enable providers to appeal on the basis of liability, classification or enforcement action?

We have combined these questions.

Yes, we agree with these enforcement powers and the basis of appeal as sensible in the context of existing civil enforcement responsibilities for councils. This would ensure a fair approach which promotes compliance, whilst providing councils with local flexibility in cases of hardship. 

The appeals process should cover liability, classification, and enforcement actions, with clear timelines and independent review. It is also necessary to set out a procedure for disputes over exemptions and calculation errors.

Question 36: Do you have any views on the potential impacts of the proposals in this consultation on persons who share a protected characteristic?

The Equality Impact Assessments by the Welsh and Scottish Governments for their levies did not identify any impacts on persons who share a protected characteristic beyond those that are proposed for exemption in this consultation. However, the government should consider whether a local EQIA should be carried out by local authorities as part of the consultation process.

Luke Masters, Adviser (Local Government Finance)

Phone: 020 7664 3363
Email: [email protected]