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Edinburgh 'tourist tax' to be set at 5%

PA Media A performer outdoors on the street at the Edinburgh festival - he is dressed in a blue suit with a blue hat, and is at the top of a pole, with ropes being held by laughing people. The watching crowd are mostly all laughing as well.PA Media
Edinburgh's busiest time for tourists comes during the festival every August

The tourist tax for visitors to Edinburgh will be set at 5% of accommodation costs, after final details for the proposed levy were confirmed.

City councillors will now decide whether to back the new tax - which would take effect from 24 July 2026 - at two meetings later this month.

The charge, which mimics those already used in Germany, Spain and Italy, covers hotels, B&Bs, self-catering accommodation and rooms and properties let through websites such as AirBnB.

The local authority hope to raise around £50m in funds per year via the tax, which it says will go towards improving the city, but businesses have claimed it could hurt trade.

A new report for the council's policy and sustainability committee - which followed a public consultation on the scheme - argued any charge higher than 5% "could be a deterring factor for visitors".

The Scottish Greens previously called for the levy to be set higher, at 8%.

The report has also suggested a "transition period" be established to help businesses adjust to the changes, which means that only bookings made after 1 May this year, for stays after 24 July next year, will be eligible for the tax.

Further changes from previously published drafts are capping the number of nights the tax affects at five, rather than seven, and removing an exemption for campsites, which will now be eligible.

The council voted in August last year to introduce the tax, after the Scottish government passed legislation giving local authorities the power to do so.

A smiling woman wearing a dark blue jacket and white scarf. She has blonde hair and is smiling directly towards the camera while outside.
Edinburgh City Council leader Jane Meagher believes the tourist tax will benefit the city

Edinburgh city council leader Jane Meagher said she believes the tax will bring "huge benefits" to the city but won't be a "silver bullet" for problems with housing.

She also denied that the tax would put off visitors.

Meagher added: "People understand the need for a visitor levy, because inevitably people coming to the city use resources that are currently paid for through council tax.

"They understand the logic of it, but most importantly get the benefits of it - they'll have a better experience coming to the city."

The fee would be a percentage of the cost of overnight accommodation - minus commission the provider pays to any online booking service and room "add-ons" like food and drink.

Leon Thompson, executive director of the trade body UKHospitality Scotland, said it was "crucial" that the levy was not raised above 5%, but that "clear and detailed guidance" was needed to help businesses implement the tax.

He said: "It's positive that the council has listened to strong feedback from hospitality businesses on this point.

"I would urge councillors to understand that the rate cannot be punitive and to be mindful of the impact any additional costs will have on businesses and visitors."

In 2023 a housing emergency was declared in Edinburgh, due to soaring house prices and rental rates, as well as a record number of people identifying as being homeless.

Tourists contribute an estimated 5.3 million overnight stays to the city every year, but already expensive room rates soar in price during the August festival season - leading some comedians and performers to say they were being priced out of attending.

A number of other Scottish local authorities have expressed interest in a tourist tax, saying they do not have enough facilities to cope with escalating numbers of visitors.