Tourist tax tipped to be imposed for staying in London

London - one of the most popular overseas destinations for Australians - is expected to introduce a tourist tax for visitors staying overnight in the city.

The UK government is being tipped to give the green light for the levy, estimated to raise £240 million ($506 million) a year for the nation's capital.

A spokesperson for London Mayor Sadiq Khan, who has long campaigned for a tourist tax, welcomed the move, the BBC reports.

READ MORE: Impact of Tropical Cyclone Fina causing temperatures to nudge towards 50 degrees

The proposed changes would bring London into line with many other international cities, such as Paris, New York and Tokyo, which impose a levy for visitors.

Research commissioned by the Greater London Authority found other global cities had three types of taxes for visitors: a percentage rate levied on stays, a single flat fee for bookings, and a levy paid depending on a star rating system.

A percentage or flat fee system would be the best option for London, the researchers concluded.

The report also said London would be "unlikely to see a significant drop in visitors" if it adopted one.

READ MORE: Impact of Tropical Cyclone Fina causing temperatures to nudge towards 50 degrees

The option for London to bring in a visitor tax is part of new laws proposed by the UK government to hand more powers to cities, which are being debated in Parliament.

Last year London recorded 89 million overnight stays.

In 2023, there were 1.2 million Australians who visited the UK, according to the Department of Foreign Affairs and Trade. Many of them would have stayed in London.

Sign up here to receive our daily newsletters and breaking news alerts, sent straight to your inbox.