Edinburgh tourist tax: Scottish Parliament passes legislation paving way for Capital visitor levy

MSPs have passed the legislation which will allow Edinburgh to become the first place in the UK to introduce a tourist tax.

It gives councils across Scotland the power to impose a percentage charge on the overnight accommodation bills of those staying in hotels, bed and breakfasts, self-catering flats, campsites and caravan parks.

Edinburgh is set to become the first place in Scotland to introduce a tourist tax. Picture: Richard Scott

But the earliest that the Visitor Levy could come into force will be spring 2026 after a last-minute plea to scrap an 18-month “implementation period” was rejected.

Edinburgh has pressed for years to be able to levy a tourist tax and council leader Cammy Day welcomed the MSPs’ approval of the Bill.

He said: “We’ve long campaigned to gain these powers for Edinburgh, helping us to reap the rewards of being one of the world’s most popular visitor decisions and generating huge benefits to the city and our residents. So, it’s a momentous day to finally see the Bill pass through Parliament.

“I remain hopeful that we’ll be among the first cities to implement a levy and, while I’m disappointed that the 18-month implementation period remains in place, I do acknowledge the additional preparation time this will provide to the hospitality sector.

“We will, of course, continue to work closely with the sector, Visit Scotland and other partners to develop the scheme in the months and years ahead, ensuring we make the very best of this huge opportunity for our city.

“A small overnight charge is common practice in other major cities and destinations and the introduction of a levy will provide a sustainable funding stream that can support culture in the city and our infrastructure, to the benefit of our visitors and, crucially, the people who live here in our great capital city all year round.”

During the final debate on the Visitor Levy (Scotand) Bill on Tuesday, the Scottish Government accepted an amendment tabled by Lothians Conservative MSP Jeremy Balfour making people in receipt of disability benefits exempt from the tourist tax.

But a bid by fellow Lothians Tory MSP Miles Briggs to secure exemptions for people visiting a family member in hospital, prison, hospice or care home was rejected, as was his call for artists and technicians at festivals to be exempted.

Mr Briggs also failed to get hostels campsites and caravans taken out of the types of accommodation covered by the levy. But local authorities will have the power to exempt businesses which are too small to register for VAT.

The government agreed, however, to require any council opting for a tourist tax to establish a visitor levy forum which will discuss and advise the council on matters related to the levy in its area.

Cammy Day has suggested Edinburgh’s visitor levy might be set at between three and five per cent and it is estimated it could raise £20m or £30m a year. Under the legislation the revenue must be spent on "developing, supporting or sustaining facilities or services which are substantially for or used by persons visiting the scheme area for leisure purposes".  

A wide variety of potential projects have been suggested - from more public toilets to tram extensions. And earlier this year, investment minister Tom Arthur who has been in charge of the Bill, indicated affordable housing would be a valid use for money raised.

A survey by the city council of residents, visitors and other members of the public, which attracted nearly 4,000 responses, found 85 per cent overall support for a visitor levy.  The survey found people felt the levy should be set at about 5 per cent, with the money raised being used for infrastructure, city services, festivals, culture and heritage.