Edinburgh to introduce 5% vacationer tax for in a single day stays – in first obligatory city-wide scheme in Britain

On Jan 9, 2025

Published: 01:34, 9 January 2025 | Updated: 04:02, 9 January 2025

A proposed tourist tax in Edinburgh is to be set at 5 per cent of accommodation costs, after final details were confirmed.

The capital is on course to become the first authority in Scotland to introduce the levy, which opponents claim poses a risk to the city’s position as a leading visitor destination.

Councillors are being asked to approve the tax despite a survey showing 51 per cent of businesses and 62 per cent of visitors oppose it or think the rate is too high.

They will make their decision this month.

The council claims the scheme could raise £50million a year for the city, which welcomes around two million visitors annually.

If agreed, the charge will be applied to bookings made on and after May 1 for overnight stays in the city on and after July 24, 2026.

More than 4,500 visitors, businesses and residents took part in a survey on the scheme.

Recommendations now include capping the number of nights the tax affects at five, rather than seven, and removing an exemption for temporary campsites and parks.

The castle of Edinburgh with fireworks during Hogmanay

Tjimurdance theatre perform in the Edinburgh Festival Fringe on the Royal Mile on August 14, 2014 in Edinburgh, Scotland

The Scottish capital is on course to become the first authority in Scotland to introduce the levy (File image)

The council claims the scheme could raise £50million a year for the city, which welcomes around two million visitors annually (File image of couple at an Edinburgh fairground)

Fiona Campbell, chief executive of the Association of Scotland’s Self-Caterers, said: ‘Given the importance of the tourist economy to the capital, Edinburgh council cannot afford to be reckless with these plans.

‘The implementation of short-term let licensing was a policy shambles and we cannot have history repeating itself with the visitor levy. Many simply don’t realise that this tax won’t just be paid by international visitors but by ordinary Scots staying in the city – be it for business purposes, seeing friends, visiting family in hospital or taking in the Fringe.’

She said that while other European cities might have similar levies ‘they often charge a small flat rate, don’t charge their own residents and don’t have a 20 per cent VAT rate’.

Ms Campbell added: ‘The schemes are not comparable. There is a real risk of undermining Edinburgh’s position as a leading destination.’

And she feared the tax could ‘cripple’ smaller accommodation providers ‘at a time when recovery is precarious’.

LONDON could bring in a tourist tax under proposals being considered by Mayor Sadiq Khan

MANCHESTER brought in a form of tourist tax through a legal workaround in April 2023

LIVERPOOL has also brought in a type of tourist tax which covers the whole city

BOURNEMOUTH had a tourist tax approved in May but this has since been put on hold

Councillors will be asked to approve the 5 per cent rate, although a report they will see next week says it is acknowledged that ‘in most cases, a 5 per cent levy would result in an overall increased cost to the visitor of 6 per cent on the price they pay for accommodation, as VAT is added to the levy’.

Leon Thompson, executive director of UKHospitality Scotland, said the rate ‘cannot be punitive’ and urged councillors to ‘be mindful of the impact’ on businesses and visitors.

A spokesman for the council said it had ‘not seen any compelling evidence from other destinations suggesting levies like the one we are proposing for Edinburgh have a detrimental impact’.

Which UK cities already have a tourist tax?

ENGLAND

Neither local authorities nor central government in England have the power to introduce a tourist tax, but Manchester and Liverpool city councils each launched one in April 2023 in through a legal workaround. They brought in tourism-based Business Improvement Districts (BID) which collect additional business rates payments from firms operating in specified areas.

Manchester introduced an ‘accommodation BID’ which is payable by hotels and serviced apartments with a rateable value of £75,000 or more, in an area within Manchester city centre and a small adjoining part of Salford. The levy is expected to raise up to £3.8million per year between 2023 and 2028 – and raised £2.8million in the first year.

In Liverpool, the BID levy covers the whole city and is payable for accommodation properties with a rateable value of £45,000 or more, with a cap of £50,000 per property. The levy is 1.6 per cent of a property’s rateable value, rising to 4.5 per cent in 2024/25 and 2025/26. It is expected to raise £939,000 per year in the latter two years.

In London, Mayor Sadiq Khan is now considering a tourist tax on the capital’s hotels, with his team looking at the evidence from other cities.

The UK’s first so-called coastal tourist tax across Bournemouth, Christchurch and Poole in Dorset was approved in May following a ballot of hoteliers. It would have required guests staying in larger hotels to pay an extra £2 per room, per night – but this was then put on hold in July following opposition from more than 40 hotels who lodged an appeal with the government over how the ballot was conducted. This week, it was revealed that the appeal was being considered by Housing Secretary Angela Rayner.

The tax has also previously been consider by councils in Birmingham, Bath, Cambridge, Cornwall and Thanet in Kent – but has not been implemented in any of those areas.

SCOTLAND

The Scottish Parliament passed the Visitor Levy (Scotland) Act 2024 in April, which gives local authorities the power to introduce a tourist tax.

Aberdeen City, Argyll and Bute, and Highland councils are also planning to consult on a levy.

WALES

Proposals for a tourist tax began going through the Welsh Parliament last month – but prompted fury from the Welsh Association of Visitor Attractions which urged its members to shut for one day in protest.

The bill will now be considered by the Senedd.