England’s Visitor Levy: What Could It Mean for Serviced Apartment Providers?

The Government has confirmed that local strategic authorities will be able to introduce an Overnight Visitor Levy on overnight stays in England. Although detailed implementation will be determined locally, the proposals have particular significance for the accommodation sector, including serviced apartment operators, investors and landlords.

What is changing?

The proposals form part of the Government's wider devolution agenda and are intended to support local economic growth and investment.

The levy will be calculated as a percentage of accommodation costs. Strategic authorities will be responsible for setting local rates, consulting on proposals and administering the levy. Accommodation providers will be legally responsible for calculating, collecting and paying the levy.

The Government has indicated that legislation will be brought forward during the current Parliamentary session and that, subject to Parliamentary approval, local leaders may be able to set out plans for investment of levy revenues by March 2028.

Why serviced apartment providers are paying close attention

For serviced apartment providers, the proposals are particularly significant because the levy is intended to apply to a broad range of commercially let visitor accommodation. Although strategic authorities may be able to exempt certain accommodation categories, serviced apartments and aparthotels are not currently identified as examples of accommodation that may be excluded from the levy.

Although providers may choose how to respond commercially, any resulting increase in accommodation charges could affect customer behaviour, particularly in competitive markets where travellers have a wide choice of accommodation options or nearby destinations that do not impose a levy.

One of the principal concerns raised by the serviced apartment sector is that the proposed levy fails to distinguish between leisure tourism and professionally managed business accommodation. Serviced apartments are widely used by business travellers, relocating employees, project teams and key workers whose presence supports investment, economic activity and productivity in local areas. If applied to serviced apartments and similar forms of business accommodation, and subsequently passed on through pricing, the levy could increase accommodation costs and reduce part of the competitive pricing advantage that serviced apartments have traditionally enjoyed relative to hotels.

Operational and compliance considerations

The tax implications of the levy may also require careful consideration. Industry bodies have highlighted outstanding questions around the interaction between the levy and VAT, particularly where providers choose to pass some or all of the cost on through accommodation charges.

Beyond pricing considerations, the practical administration of a visitor levy may present operational challenges. Accommodation providers are expected to be responsible for collecting and remitting any levy introduced in their area, which may require updates to booking platforms, billing systems, customer communications and internal compliance processes. Businesses operating across multiple locations could face additional complexity if different authorities introduce levies at different rates or on different timescales.

Looking ahead

Whilst the introduction of an Overnight Visitor Levy represents a significant policy development, important questions remain around timing, implementation and the practical impact on different parts of the accommodation sector. Operators, investors and landlords will therefore be watching closely to see where levies are introduced, the rates adopted and the administrative requirements that accompany them.

We will continue to monitor developments as the Government progresses its proposals and further implementation details become available.

This article is intended as a general overview of recent developments and does not constitute legal advice. Specific advice should be sought in relation to particular circumstances.