London Mayor Sadiq Khan will be allowed to slap a Venice-style ‘tourist tax’ on visitors to the capital, under new plans announced by Labour.
The government set out plans to let regional mayors charge people staying overnight in English cities, in an announcement ahead of the 2025 UK Budget.
Tourists would be hit by a nightly tax on staying in hotels and short-term rentals like Airbnbs, with the money going towards funding local projects.
Khan said a tourist tax is ‘great news’ for London, which had 89million overnight visitors in 2024.
‘The extra funding will directly support London’s economy, and help cement our reputation as a global tourism and business destination,’ he added.
Housing secretary Steve Reed said: ‘Tourists travel from near and far to visit England’s brilliant cities and regions.
‘We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.’
It comes ahead of Chancellor Rachel Reeves’ second Budget, which will take place tomorrow afternoon.
Full list of drinks set to be hit with Budget sugar tax – including popular milkshakes
The tax on sugary drinks is about to get a lot broader, with milkshakes brought into line for the first time.
Sugar content in soft drinks collapsed by 46% in the past five years as a result of the levy introduced by Chancellor George Osborne in 2016, according to the Food and Drink Federation.
But there was a carve-out for sugary milk-based drinks like milkshakes and lattes.
Read more below.
Scotland’s national drink ‘under threat’ from sugar tax, say Tories
The Conservatives have slammed changes to the sugar tax that will hit soft drinks including Irn Bru.
Andrew Bowie, shadow Scottish secretary, said: ‘Scotland’s national drink is under threat from this Labour government.
‘Irn-Bru is an institution in its own right and its practically part of Scotland’s DNA. But now it seems Rachel Reeves is set to push its price up by another 5 per cent.
‘It’s clear that everyone is going to be punished by this Budget.’
The tax will soon apply to drinks with 4.5 grams of sugar per 100 millilitres, down from the current 5g.
That means other soft drinks such as 7Up, Pepsi and Fanta will also be affected as they contain between 4.5g and 4.7g of sugar.
Reeves to open the door for London tourist tax in Budget
Rachel Reeves will reportedly let Mayor of London Sadiq Khan impose a ‘tourist tax’ on overnight stays in the capital.
The Chancellor could give regional mayors the power to charge people visiting English cities, with a consultation being announced in tomorrow’s Budget, reported Bloomberg.
The plan would see tourists facing a £2 charge on staying in hotels and short-term rentals like AirBnbs. London had 89million overnight visitors in 2024.
Khan has previously made the case for giving cities like London more tax powers, which would follow the example of other European destinations like Barcelona, Paris and Athens.
Hospitality groups have opposed tourist taxes in the past because they say it could stop people coming from other parts of the UK for a city break.
But think tank the Centre for Cities has said it would be unlikely to stop people coming to visit the capital and that its lack of a tourist tax makes it an ‘international outlier’.
Metro approached the Treasury for comment.
Health secretary Wes Streeting confirms ‘milkshake tax’ rollout
Wes Streeting confirmed the sugar tax will soon apply to milk-based packaged drinks like milkshakes and lattes.
Speaking in Parliament on Tuesday, the health secretary said: ‘Obesity robs children of the best possible start in life, hits the poorest hardest, sets them up for a lifetime of health problems and costs the NHS billions.
‘I can announce to the House we’re expanding the soft drinks industry levy to include bottles and cartons of milkshakes, flavoured milk and milk substitute drinks.
‘We’re also reducing the threshold to 4.5 grams of sugar per 100 millilitres.
‘This government will not look away as children get unhealthier and our political opponents urge us to leave them behind.’
The Conservatives and Reform UK have opposed extending the sugar tax.
The announcement comes as part of a range of expected tax rises in the Budget as Rachel Reeves looks to bring in more cash to help pay for improvements to public services.
What is the the sugar tax, the milkshake tax and why could the rules change?
The sugar tax applies to cans and cartons of drink that have more than 5g of sugar per 100ml.
It was brought in by the Conservatives in April 2018 because of high levels of obesity in the country.
Milk-based drinks like lattes, protein shakes and milkshakes don’t current pay the tax, but that is expected to end in the Budget.
Health secretary Wes Streeting will also speak in Parliament this morning where could confirm the change.
The government has also been looking at bringing down the maximum amount of sugar before the tax kicks in from 5g to 4g.
When the original sugar tax was brought in, most brands just cut the amount of sugar to just below the threshold to avoid paying it.
That means it didn’t bring much money in for the government – but it did make fizzy drinks a bit less unhealthy.
Reeves could cut yearly Cash ISA savings limit to £12,000 in Budget
Rachel Reeves is reportedly planning to cut how much money people can stash into a popular type of savings account, in a move critics say would be bad for savers.
The Chancellor is set to slash the annual Cash ISA limit from £20,000 to £12,000 in the Budget, as part of a push to get more households investing in the stock market.
Cash ISAs are a type of savings account where you can put money in without paying tax on it. They are low risk and pay a small amount of interest.
They are also seen as a safe option compared to the riskier Stocks and Shares ISA account, which puts the money you save into the stock market instead.
That means it can bring much higher returns if things go well, but you also risk losing money if the stock market goes down.
The Government thinks pushing more people to invest in stocks would help spur economic growth, which is partly behind plans to lower the annual limit on Cash ISAs.
But Cash ISAs are far more popular – with about 14.4 million people having one, compared to 4.2 million people who hold Stocks and Shares ISAs, according to finance firm AJ Bell.
Reeves had initially planned to reduce the cap to £10,000, reported the Financial Times, but is now angling for a watered down version with a £12,000 limit.
Tory shadow chancellor Sir Mel Stride told the Mail it would be a ‘tax raid’ on hardworking savers.
Health minister says ‘green shoots’ starting to show in NHS but ‘it’s got a long way to go’
People are ‘starting to feel’ improvements in the NHS and ‘green shoots are there’, a health minister has said, when questioned over how potential tax rises would fund the health service.
When asked by Sky News whether any boost to the health service in the Budget would merely be spent on striking doctors, Karin Smyth said: ‘The Chancellor protected the NHS and our public services in the last budget and that, as you’ve outlined, does involve those hard choices, but it is yielding results.’
Thousands of resident doctors in England went on strike last week amid a dispute about pay.
Smyth continued: ‘Those waiting lists are coming down by over 200,000, we had more GPs put into post, access is improving. It’s got a long way to go.
‘We understand that. It is really difficult. The strikes are really difficult. They do knock some of that improvement off course, but those green shoots are there.
‘And I think people are starting to feel that, and staff are starting to feel that.’
Reeves ‘relishes the challenge’ of being Chancellor, says minister
Rachel Reeves ‘relishes the challenge’ of her job and there is a ‘difference’ from having a female Chancellor, a minister said when asked if she agreed Reeves had been subjected to misogyny.
Asked whether there should be more focus on ‘competence and success’ than ‘identity politics’, or whether she thought Reeves had faced misogyny in her role, health minister Karin Smyth told Times Radio: ‘Look, Rachel is well able to challenge and relishes the challenge that she has got as the first female Chancellor.’
She added: ‘I think it is inspirational to lots of young women, particularly she’s the first woman Chancellor in 300 years, something she’s very proud of, and rightly so. With that comes a lot of criticism.
‘Every single Chancellor gets criticism… I think there is a difference for a woman Chancellor as well, absolutely, for all women politicians, that not new or unusual.’
Smith said: ‘I hope it changes – and our job is to inspire another generation, which I know Rachel does do, to to get involved and change that situation.’
Milkshake tax back on the agenda
A milkshake tax, which has been long-discussed by former chancellors, could come up in this year’s Budget.
Reports have suggested the Government will announce the so-called tax on sugary packaged drinks to tackle obesity and improve the nation’s health.
Asked whether tackling obesity was more important than raising revenue, Karin Smyth told Times Radio that any tax measures would be set out in the Budget but ‘the wider point is about tackling obesity, which we know is one of the biggest causes of ill health, and therefore demand on the health service.’
‘Measures we’ve already announced as part of the manifesto, to reduce junk food advertising, particularly to protect young people from becoming obese, because if you come obese at a young age, it does limit your life chances,’ she said.
‘So tackling obesity is a central plank of prevention, which is one of our three shifts in the NHS, which we announced in the 10-year plan, as is getting down these waiting lists.’
Ms Smyth added: ‘Obesity is the major challenge of our health service for this generation, and it is important that we make sure that we create the healthiest young generation of children coming forward.
‘That’s why we are trying to we’re getting through, for example, the Tobacco and Vapes Bill.
‘So it’s important to balance public health and work with industry to make sure that happens.’
