What will Scotland's 'tourist tax' mean for hotels?

 

Scottish MSPs have voted to approve a ‘tourist tax’ which would allow local authorities to add a charge to overnight stays in hotels, B&Bs and holiday lets.

 

The Visitor Levy (Scotland) Bill was passed by 83 votes to 27 in the Scottish Parliament on Tuesday (28 May).

 

Similar charges already apply in European tourist destinations such as Amsterdam and Berlin, but the tax has been subject to years of debate in Scotland.

 

Last year Manchester became the first UK city to impose a £1 per night city visitor charge to guests staying in city centre hotels or holiday apartments.

 

Visitors to Bournemouth, Christchurch and Poole will have to pay a levy of £2 per room, per night, from 1 July after local hoteliers voted in favour of the first coastal ‘tourist tax’.

 

How will the Scottish charge work?

 

The earliest any visitor levy could come into force in Scotland would be spring 2026.

 

Councils will be given the power to introduce an extra charge on overnight stays and use the money raised to reinvest in services and facilities used by visitors.

 

It will be up to individual councils if they wish to use the tax, although local authorities in Edinburgh, Aberdeen and Highland have supported the scheme in the past.

 

Councils that want to introduce a visitor levy will have to first consult with local communities, businesses and tourism organisations.

 

There will then be an 18-month implementation period to allow businesses and councils to put systems in place.

 

Anyone receiving disability benefits will be exempt from the tax and ministers will have the power to cap the number of nights on which a tax would apply.

 

Councils will be required to set up visitor levy forums to offer advice on how the scheme is run in the local area.

 

The Scottish government will have to review the Visitor Levy Bill no later than three years after the date of the first scheme comes into effect.

 

What has been the industry reaction?

 

UKHospitality has called for hotels to be reimbursed for any costs involved in preparing IT and admin systems for handling the levy payments.

 

The trade body has worked with local authorities to create guidance for any councils looking to introduce the scheme, which will be published this summer.

  

Leon Thompson, executive director of UKHospitality Scotland, said: “Charges will add additional cost to holidays for international and domestic visitors.

 

“This will add to the competitive disadvantage Scotland currently faces. Over and above cost considerations, if handled badly, levies will have consequences for the reputation of brand Scotland. I urge councils to listen to the voice of business when considering the introduction of a levy.”

 

Colin Wilkinson, managing director of the Scottish Licenced Trade Association (SLTA), said the scheme was “a tax and not something we support in any way.”

 

He said the SLTA was concerned councils could withhold money raised by the tax for their budgets rather than use it to support local tourism economies.

 

“Our concerns are if this ‘visitor levy’ will have a negative impact on Scotland’s competitiveness in attracting tourists once they fully realise that they already pay 20% VAT, plus a tourist tax of perhaps 7%, and VAT on that,” said Wilkinson.

 

“We accepted this week’s decision but, in our view, its introduction is yet another burden on a hard-pressed sector still recovering from the pandemic and navigating current and ongoing costs of doing business.”

 

Image: The W Hotel Edinburgh