Local councils in London are banding together in a bid to keep at least half of the profits levied from overnight tourist taxes in the UK capital. The fee would be applicable to all commercial short-term rentals in the city, and the funds raised are intended to go towards managing the local impacts of tourism and investments in the visitor economy.
Responding to the tourist tax proposal, the capital’s local government lobby group, London Councils, which represents the 32 boroughs and the City of London Corporation, has called for at least 50% of the money generated to be retained by councils.
The call echoes that of Central London Forward (CLF), a partnership representing 12 inner London boroughs (Camden, the City of London, Hackney, Haringey, Islington, Kensington and Chelsea, Lambeth, Lewisham, Southwark, Tower Hamlets, Wandsworth, and Westminster). CLF chair and leader of Westminster City Council, Adam Hug, has previously argued that the 12 central boroughs should receive at least 50% of the tax revenues, because they host 71% of London’s hotel rooms and 67% of its short-term rentals.
With the pot helping to pay for the additional local costs tourism brings, from enforcing community safety measures and licensing, to business support, street cleaning, improvements to local services and public spaces, London Councils say all local stakeholders in hospitality and travel and tourism could be assured that the taxes bring them benefits and boost the local economy.
We welcome the government's proposals to allow Mayor Strategic Authorities in England to introduce local overnight visitor levies in London and other regions.
— London Councils (@londoncouncils) February 6, 2026
We are calling for the government to ensure that London boroughs retain at least 50% of funds raised in their local area… pic.twitter.com/C7TbtJ3P2c
Cllr Claire Holland, Chair of London Councils and Lambeth council leader, said the “vital” plan would ease burdens on boroughs. “Boroughs shoulder many of the day-to-day costs associated with tourism – from maintaining streets and transport hubs, to supporting cultural venues and managing community safety pressures – helping to keep London attractive, clean, and safe.” In addition, the allocation would act as an incentive, the lobby group said, giving councils an interest in fostering their borough’s tourist economy.
Expected to raise £350 million annually (over €402 million), after the borough’s 50% allocation, the remaining £175 million tax purse could be spent on partnership working between the Mayor of London and boroughs on cross-London services.
With talks over the proposed taxes still underway, a Ministry of Local Government spokesperson said the new taxes would give the city powers to invest in economic growth, adding: “We’re still consulting on what the levy will look like and will set out next steps in due course.”
London’s mayor, Sadiq Khan, has previously hailed the potential impact from the tourist tax, saying the revenue raised would “directly support the capital’s economy and help cement our reputation as a global tourism and business destination.”
