Edinburgh 5% ‘tourist tax’ to arrive by July 2026

The transient visitor levy will be applied to the first 7 days of accommodation costs in the Scottish capital to raise £50million for the city annually.

First Published: 8th January 2025

Edinburgh is one step closer to becoming the first Scottish city to impose a so-called ‘tourist tax’ on visitors to the city.

Following the conclusion of a public consultation, Councillors are now to begin drafting a transient visitor levy (TVL) after residents and businesses voiced broad support for a 5% tax on accommodation for tourists holidaying in the city.

All overnight stays at hotels, B&Bs and short term let booked through AirBnB and similar websites within the City of Edinburgh boundary will be subject to the new tariff from July 2026, under the newly unveiled plans.

The figure was agreed upon after Edinburgh City Council opened a public consultation in September, which ran through to mid-December and will be capped at a 7-night stay.

The survey received more than 4,500 responses and collected additional feedback at events and drop-off points around the city.

During the consultation, 91% of Edinburgh residents showed “strong support” for the levy; 77% among city businesses; 69% among tourists; and just 51% of Edinburgh accommodations showing the same level of support.

A greater number of respondents supported a flat rate levy, but 38% showed “strong support” for a proportional tax on the cost of accommodation.

In May 2024, the Scottish Government passed the Visitor Levy (Scotland) Act 2024, granting powers to local councils for the introduction of a TVL at their discretion.

Three months later, Edinburgh City Council backed plans, with hopes it will bring £50 million into the city each year.

Edinburgh’s tourism status initially led to an influx of AirBnB rentals, before council restrictions led to supply constraints and festival visitors dropped 13% after rentals and accommodations priced many out of the world’s biggest arts festival.

The Scottish Green Party sought a levy as high as 8% on the cost of a visitor’s stay, but the council’s policy and sustainability committee determined anything higher than 5% “could be a deterring factor for visitors”.

The report also set out plans for an adjustment period to help visitors transition to the new scheme.

Only visitors booking after May 2025 for trips after July 2026 will be expected to fork out for the additional cost of their stay.

The levy will come into full effect in July 2026, after attaining royal ascent.

During the process, Executive Director of UKHospitality Scotland Leon Thompson told Edinburgh City Council it was “essential” the hospitality sector could “retain a mechanism for business cost recovery”.

Speaking after the announcement, he said : “It’s crucial that the Visitor Levy was not raised above the proposed rate of 5% and it’s positive that the Council has listened to strong feedback from hospitality businesses on this point.

“Retaining a mechanism for business cost recovery, as called for by UKHospitality Scotland, was essential and I’m pleased that this remains within the revised scheme.

“The proposal to apply the levy to eligible bookings from May this year is a quick turnaround for businesses, who will have to implement new systems and ways of working in just over three months. To make this achievable, the Council will have to work at pace to urgently provide clear and detailed guidance for businesses tasked with collecting levy funds.”

Mr Kennedy, who represents 150 members operating more than 8,000 venues across Scotland, urged councillors to be “mindful of the impact of additional costs” on both businesses and visitors when the time comes to vote on the proposal later this month.

Ex-council leader Cammy Day claimed the tax could earn the city upwards of £50 million each year, providing an “innovative way” of sustaining Edinburgh’s global appeal as a centre for tourism.

An Edinburgh tourist levy would be a first for Scotland, but Manchester introduced a tax of £1 per room per night in April 2023, raising £2.8 million for the city after one year.

Further afield, cities around the world such as New York, Amsterdam, Venice, Bali and the US state of Hawaii have all successfully introduced TVL for tourists, in addition to a long list of countries around the world.