In our initial look at the Edinburgh visitor levy we set out what it involved and the impact it could have on the city’s tourism industry. This latest blog now looks at the process and detail as the actual implementation phase of Scotland’s first ever visitor levy looks likely to be activated.

In the coming weeks, the City of Edinburgh Council (“CEC”) is set to introduce Scotland’s first Visitor Levy. This follows the commencement of the Visitor Levy (Scotland) Act 2024 (“the Act”), which empowers, but does not require local authorities to introduce a visitor levy for a set maximum number of nights (following consultation), set at a percentage rate. The Act does not suggest or limit the rate, which is left to be determined by local authorities.  

Before a levy can be introduced, local authorities must publicise its proposals, its objectives, and an impact assessment. In addition, local authorities must run a 12 week consultation and summarise the responses received in a report, which CEC has now completed.  

In line with the Act, CEC consulted on the proposed levy and asked residents and businesses for their views on the proposed 5% levy rate, the types of overnight accommodation covered by the levy, the maximum number of nights the levy should be applicable for and whether there should be exemptions. 

After receiving over 4,500 responses, the CEC has now published its final proposals. 

The final proposals 

As outlined by the CEC, the proposed levy will:

• introduce a tax set at a 5% rate on overnight stays for all overnight accommodation, payable for a maximum of five consecutive nights; 
• cover the entirety of the CEC’s boundaries; 
• apply to overnight stays year-round from 24 July 2026, booked and paid for (in part or full) on or after 1 May 2025; 
• raise £100 million in revenue over the first three years, and £50 million per year thereafter; and
• use generated revenue to develop Edinburgh’s visitor economy, public services and infrastructure to provide a safe visitor and resident experience, alongside supporting Edinburgh’s culture and events.

By applying to overnight stays from 24 July 2026, this would fulfil the 18-month implementation period as required by the Act. This is intended to provide adequate time for local authorities and businesses to develop the systems needed to collect and administer the levy. 

What this means for the sector – and will other local authorities follow?

The impact of the visitor levy on the private sector, particularly on the tourism industry, will undoubtedly be monitored by the CEC. If passed, some believe that the levy could reduce visitor demand in Edinburgh or see tourists spending less in the city. 

Other concerns have been raised around the administrative cost and burden of collecting the levy, which would add to the pressure accommodation providers are already under due to inflation and the cost-of-living crisis, and the recent significant changes for short term lets within Edinburgh.  

Despite these concerns, the CEC’s final proposals reveal that 2% of collected funds from the levy are to be refunded to accommodation providers regardless of size, which should provide some comfort to the sector. 

If Scotland’s first visitor levy is passed by the CEC on 24 January 2025 and implemented within the 18-month period, other Scottish local authorities are likely to take note and consider whether they too should introduce a charge on overnight accommodation. This is already the case for The Highland Council, with its consultation on a proposed levy now live. Aberdeen City Council, Glasgow City Council and Stirling Council, all look poised to propose similar levies in 2025. 

In the meantime, all eyes will be on Edinburgh City Chambers, and our Public Law experts are on hand to advise on what this means for you and the wider sector during the 18-month implementation period and beyond.

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