The British Independent Retailers Association says money raised through the levy should be reinvested in the high streets and local economies where visitors spend.
Independent retailers have warned that England’s planned Overnight Visitor Levy could reduce the amount visitors spend in shops, cafés and other high-street businesses.
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The British Independent Retailers Association (Bira) said the additional cost could shift spending away from local businesses unless the revenue raised is reinvested in the communities where it is generated.
The warning follows the UK government’s confirmation that strategic authorities in England will be given powers to introduce an Overnight Visitor Levy as part of its devolution programme.
The levy, sometimes described as a tourist tax, will not be a nationwide charge. Individual authorities will decide whether to introduce it and, if so, what rate to apply.
The charge will be calculated as a percentage of eligible accommodation costs rather than as a fixed fee.
Bira warns of impact on retail spending
Bira chief executive Andrew Goodacre said the organisation supported giving local leaders greater control over investment in their visitor economies but questioned how the new revenue would be spent.
“Every extra pound a visitor pays in levy is a pound they don’t spend in the independent shops and cafes on the high street,” Goodacre said.
He added that the revenue would need to produce a visible benefit for the high streets serving visitors.
“If this money isn’t visibly and directly reinvested into the high streets that serve visitors, we risk taking money out of local economies rather than putting it back in,” he said.
Bira said it had reviewed two mayoral strategic plans and found that high streets received little attention.
“Before this levy goes any further, we need cast-iron assurances that the money raised in a town or city will actually be spent supporting the businesses in that same town or city,” Goodacre said.
The policy presents a potential trade-off for retailers in tourism-dependent locations. Levy revenue could fund improvements that make destinations more attractive to visitors, but the charge will also increase the cost of an overnight stay.
How England’s Overnight Visitor Levy will work
The government confirmed the final design of the policy following a consultation that ran from November 2025 to February 2026. Its response was published on 10 September 2026.
Strategic authorities will be able to decide whether to introduce a levy in their areas and will be required to consult on their proposals.
The government has chosen a percentage-based charge rather than a flat fee. Visitors staying in cheaper accommodation will therefore pay less than those booking more expensive stays.
There will be no nationally prescribed levy rate or maximum rate, leaving strategic authorities to determine the appropriate level locally.
Legislation is still required to establish the new powers. The government expects mayors and Foundation Strategic Authority leaders to set out plans for investing levy revenue by early 2028.
Government says levy can support high streets
The government says the levy will give local leaders additional resources to invest in infrastructure, public transport, public spaces and the visitor economy, including high streets.
It has also cited evidence from visitor levy schemes in the UK and overseas suggesting that modest charges have limited effects on overall visitor numbers.
However, the separate question of how a levy could affect visitors’ spending after they reach their destination remains less certain.
In April 2026, the government was asked specifically about the potential impact of an overnight visitor levy on spending in local high streets, hospitality businesses and attractions.
It said the impact would largely depend on local decisions, including whether individual mayors choose to introduce a levy and the terms of any scheme they establish.
The government has said the levy is intended to support local economic growth and the visitor economy.
Retailers want revenue kept local
For Bira, the central issue is therefore not simply whether visitors will pay more for accommodation, but how the resulting revenue will be spent.
The association wants money raised from visitors to be visibly reinvested in the high streets and local businesses that serve them.
Local authorities will therefore face a balance between raising additional funds from tourism and ensuring the levy does not weaken spending at businesses that depend on visitors.
The ultimate impact on retail spending will depend on which authorities introduce the levy, the rates they set and how they invest the revenue.
