Visitor levy: What accommodation providers need to know

Edinburgh’s visitor levy came into effect on 24 July 2026. If your client provides paid overnight accommodation in the city, they’ll need to charge the visitor levy and submit their first return in October for stays covering July to September. We take a look at the key details of the scheme.

What is the visitor levy?

The Scottish government enacted the Visitor Levy (Scotland) Act 2024 in July 2024. This gave local authorities the power to charge a visitor levy on overnight accommodation, though largely leaves the design of the visitor levy to the individual local authority. Each local authority can choose whether to implement a visitor levy scheme or not.

Edinburgh City Council is the first local authority to introduce a levy, with Glasgow City Council, Aberdeen City Council, West Dunbartonshire Council and Stirling Council following in 2027.

The legislation:

• Makes the accommodation provider liable for the levy.
• Applies the levy to overnight accommodation, including hotels, hostels, self-catering accommodation, camping sites, caravans, guest houses and bed and breakfasts.
• Allows each local authority to set either a fixed rate or percentage-based levy and decide the exact amount.
• Excludes non-accommodation expenses like parking, meals, transport from a percentage-based levy.
• Allows fixed rate levies to vary by accommodation type, but percentage-based levies must apply to all types of accommodation at the same rate.
• Means local authorities can, at their discretion, allow the accommodation providers to retain a portion of the levy. 

Applies the levy to the initial transaction where accommodation is purchased through a third party, such as an online booking platform, meaning it’s included in the price when the third party (such as a tour operator) purchases the accommodation.

Revenue raised from the visitor levy must be used to support facilities and services used by visitors.

Find out more on the Visit Scotland website, including guidance for businesses. 

Edinburgh City Council visitor levy

The Edinburgh Visitor Levy is the first visitor levy to go live in Scotland. Under this scheme, the levy:

• Is a 5% payment on the cost of the paid for the overnight accommodation before VAT.
• Applies to the first five nights of a  stay.
• Applies at the same rate every day of the year.
• Does not apply to qualifying stays on or after 24 July 2026 which were booked and paid for, in part or full, before 1 October 2025.
• Applies to all overnight accommodation providers, including those below the VAT threshold.

In Edinburgh 2% of levy funds collected will be reimbursed to accommodation providers. This will be calculated when accommodation providers submit their returns and is operated on a retention basis. So, if an accommodation provider has collected £100 in visitor levy, they'll only need to pay the Council £98 and can keep the £2 difference. 

Returns are required in October, covering the period from July to September. Learn more about the requirements and the deadline can be found on the Edinburgh City Council website. Returns should be submitted via visitorlevy.scot.

Read Edinburgh City Council’s guide to the visitor levy.

VAT position

The visitor levy is subject to VAT. It's treated as consideration for the supply of accommodation and therefore forms part of the taxable supply.

Businesses need to include the visitor levy as part of their turnover for VAT purposes. This may mean that a business currently under the VAT threshold now becomes liable for VAT.

In HMRC's view, any change to the current VAT treatment would need to be pursued either through the relevant visitor levy legislation and the Scottish administration, or through a wider change to UK VAT legislation, which would be a matter for HM Treasury (HMT).

One potential route to changing the VAT position is to amend the Visitor Levy (Scotland) Act 2024 so that visitors, rather than accommodation providers, are liable for the levy. This would address the VAT issue but would  be difficult to administer.

Another option is to amend the UK VAT legislation so that the visitor levy is exempt from VAT. Currently, visitor levies are treated like any other local levy under UK VAT law and so subject to VAT. Amending UK legislation would, however, take a considerable amount of time. At this current time, HMT have no plans to amend the UK legislation.

We’ve been involved in ongoing discussions on the VAT treatment, since this can present considerable difficulties for smaller businesses. Tell us how the visitor levy has affected you and what further guidance you need from the UK or Scottish governments.

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