Edinburgh poised to introduce 5% 'tourist tax'

A tax on accommodation in Scotland’s capital is to be set at 5%, after final details of a proposed tourist levy were confirmed.

 

The charge will cover hotels, B&Bs, self-catering accommodation and short-term rental accommodation, such as Airbnbs, in Edinburgh.

 

If approved, visitors will pay 5% plus VAT on the total cost of accommodation in the city.

 

UKHospitality Scotland’s executive director Leon Thompson said it was “crucial” the levy was not set any higher.

 

Edinburgh city councillors will decide later this month whether to introduce the tax, which would be applied to overnight bookings made on and after 1 May 2025 for stays on and after 24 July 2026, just days from the start of the annual Edinburgh Fringe Festival.

 

Thompson said plans to apply the levy to bookings from May this year would mean businesses would have to act swiftly to implement new ways of working in just over three months.

 

He urged the council to “to be mindful of the impact any additional costs will have on businesses and visitors”, if the tax is implemented.

 

The proposals include a cap on the levy if visitors stay for more than five consecutive nights and providing admin support for accommodation providers equalling 2% of visitor levy income.

 

Edinburgh city council voted to introduce the tax last autumn after it was given the power to do so by the Scottish government. A 12-week consultation with business, residents and visitors was conducted last autumn.

 

The final proposals will be considered at two council meetings later this month, the first on 17 January and the second on 24 January.

 

If the council votes to go ahead with the proposal, the levy is expected to raise up to £50m a year for the city.

 

Council leader Jane Meagher said the additional income will be used to “manage tourism sustainably” and “boost projects which benefit the experience of visitors and residents”.

 

In 2023, Manchester became the first UK city to impose a £1 visitor charge on overnight stays in city-centre hotels or holiday apartments.

 

The Welsh government is also considering introducing a £1.25 per night tourism charge from 2027.

 

Taxes on overnight tourist stays are also used in the majority of the 27 EU member states.