Edinburgh takes historic decision to introduce UK's first comprehensive tourist tax

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Councillors in Edinburgh have made the historic decision to make the Capital the first place in the UK to introduce a comprehensive city-wide tourist tax.

The plans for a 5 per cent Visitor Levy, payable for the first five nights of any stay, starting in July 2026, were passed at a special full council meeting, with the Lib Dems and Tories supporting the minority Labour administration. The meeting had to be held online because of the red weather warning over Storm Eowyn.

Council leader Jane Meagher said: “This exciting and groundbreaking scheme has been a long time in the making and part of Labour’s vision for the city for well over a decade.

Edinburgh's Royal Mile during the Edinburgh Festival Fringe. Picture: Jane Barlow/PA WireEdinburgh's Royal Mile during the Edinburgh Festival Fringe. Picture: Jane Barlow/PA Wire
Edinburgh's Royal Mile during the Edinburgh Festival Fringe. Picture: Jane Barlow/PA Wire

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“Tourism is an important part of Edinburgh’s success as a city. However, it inevitably puts strain on the city’s resources and if we want to maintain and develop the city’s tourism offer we need the means to enable us to do that in a planned and sustainable way.”

The SNP had wanted a 7 per cent levy and the Greens proposed 8 per cent, while the Tories - opposed to the idea of the levy - suggested 4 per cent. Cllr Meagher said 5 per cent seemed “a reasonable compromise and a good starting position”.

Tourist taxes are common in cities across Europe, from Amsterdam to Zurich, and around the world. Manchester introduced a City Visitor Charge of £1 per night but it is run by a business group and applies only to 74 hotels and short-stay serviced apartments in the city centre.

Edinburgh's scheme will cover almost all paid-for overnight accommodation, including hotels, guest houses, B&Bs, short-term lets and campsites. It is expected to raise £100 million over the first three years and then £50m a year.

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Under legislation, the revenue from the levy must be used to support the visitor economy. The council plans to invest the money in a range of areas, including affordable housing, city infrastructure, destination marketing and support for major events and festivals.

Visitors will have to pay the levy from July 24, 2026Visitors will have to pay the levy from July 24, 2026
Visitors will have to pay the levy from July 24, 2026

The council also agreed to extend the transition period for adding the levy to advanced bookings for July 24, 2026 and beyond after hospitality providers complained they would not be able to change their systems in time to add the levy from May 1, 2025, as the council wanted.

Labour’s proposal to delay the date to October 1, 2025 was backed by the Tories and Lib Dems, but branded a betrayal by the Greens, who said it would cost the city around £1.5 million.

Green councillor Alex Staniforth suggested the delay was due to fears of a judicial challenge.

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But he said: “I’m sceptical that the necessary changes cannot be made within three months. The calculations necessary to do on websites and so on should be a few lines of code at most. There is nothing particularly complicated about calculating tax around accommodation then adding it to the total cost of a package deal.”

However, Cllr Meagher defended the move. She said: “It makes sense to me to listen to the very people who have to collect the levy on our behalf. This will not affect the implementation date of the levy. What it does do is sensibly adjust the transition period to the lowest of those requested by the businesses concerned.”

The SNP called for more of the money raised by the levy to be invested in housing, describing Labour’s plan to use £5m a year for borrowing, resulting in a potential £130m over 30 years to finance new affordable homes, “the bare minimum”.

SNP group leader Simita Kumar said the SNP would add, on top of that, another £15m a year in grant funding, which could mean a total of almost £1 billion for housing over 30 years.

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She said Edinburgh’s housing crisis should be the top priority for everyone and accused Labour of a “dereliction of leadership”. “We need to address a critical and growing crisis that threatens to undermine the very fabric of our community.”

And she said the SNP’s housing investment proposal would be “a lifeline for our residents and those working in the visitor economy”.

Tory group leader Iain Whyte argued the council should not be using tourist tax money for housing and raised the prospect of a legal challenge.

He said: “It’s a very debated point, it’s not as simple as people are suggesting and it is possible that this will likely bring judicial review of the council’s decision.

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“But more importantly I don’t think the small amount from this reflects what will actually make any difference to the housing crisis, nor will it show to businesses that we’re wanting to act in line with the scheme’s objectives, as set out in legislation.”

In summing up before the vote, Cllr Meagher, who earlier told the council she was confident the scheme as proposed was entirely consistent with the legislation, said: “The visitor levy is not a silver bullet for the city’s housing emergency and we must remember the Scottish Government slashed it is affordable housing supply budget in 2024 by 24 per cent.

“We also have to remind ourselves that the Scottish Government legislation sets the parameters of the levy and that is to support develop or sustain the visitor economy. And we have a challenge in terms of working out the detail of that, for example, how we evidence that what we do in housing does in fact do that.”

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