Scotland Approves Visitor Levy Bill That Allows Towns to Tax Tourists in 2026

| June 10, 2024
Scotland Approves Visitor Levy Bill That Allows Towns to Tax Tourists in 2026

Scotland has taken a significant step in managing the influx of tourists by passing a bill on tourist tax.  

The proposal, known as the Visitor Levy Bill, was approved by the Scottish Parliament on 28 May 2024.

It allows towns across Scotland to charge tourists a small nightly fee for lodgings within its jurisdiction.

This includes overnight stays in a town’s hotels, short-term rentals, and other paid accommodations.

The Visitor Levy Bill aims to boost local economies while managing the impacts of tourism.

The revenue collected from the tourist tax will be reinvested in local services and amenities.

Still, the Scottish Government has emphasized that the earliest implementation of any levy would be in spring 2026.

Historic legislation for tourist management in Scotland

Passing the Visitor Levy Bill makes Scotland the first UK constituent country to implement a nationwide tourist tax framework.

First proposed in 2019, the bill’s passage marks a milestone for the UK, providing local authorities the autonomy to introduce visitor levies.

The visitor levy or tourist tax will be applied as a percentage of the accommodation cost for both leisure and business stays.

The initiative draws inspiration from similar levies in European cities like Amsterdam and Berlin.

Tourist taxes in such destinations have successfully contributed to local economies.

Scotland’s capital, Edinburgh, has been a vocal advocate for the levy. 

Cammy Day, the city’s council leader, described the approval as a “momentous day” for Edinburgh, as per TTG Media’s report.

He hopes Edinburgh will be among the first cities to implement a tourist tax and benefit from being “one of the world’s most popular” destinations.

Day also highlighted the potential benefits for the city’s infrastructure and services.

Visitor levy implementation and community involvement

Before implementing a visitor levy, Scottish councils must consult extensively with communities, businesses, and tourism organizations.

This consultation period is crucial to ensure the levy system is fair and beneficial for all stakeholders.

Following these consultations, there is an 18-month implementation period to finalize the administration and collection methods.

While Edinburgh Councilor Day was disappointed about the implementation period, he recognized that the hospitality sector will need this “additional preparation time.”  

“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,” he added.

The legislation also includes several key provisions to address concerns and ensure fairness:

  • Individuals receiving disability benefits from the UK or Scottish Government are exempt from paying the tourist tax.
  • Scottish Ministers also have the authority to cap the number of nights the levy can be applied.
  • Councils introducing a levy must also establish a forum to oversee its implementation and impact.

Guidance for local authorities is currently being developed to assist in this process.

Additionally, the Scottish Government will review the law three years after the first levy is enacted, ensuring it remains effective and relevant.

Benefits and strategic use of the Visitor Levy fund

The visitor levy revenue is expected to provide a sustainable funding stream for local services, cultural activities, and infrastructure improvements.

The Scottish Government’s analysis showed that a modest tourist tax of between £ 1 and £2 per room per night could generate between £237 million and £495 million in revenue for local authorities annually.

Edinburgh plans to use these funds to support its vibrant cultural scene and maintain its status as a leading global tourist destination.

Scotland’s investment minister, Tom Arthur, believes visitor levies would enhance Scotland’s reputation as a sustainable destination.

“We have sought to deliver as much flexibility to local authorities as possible,” he said.

Local authorities can customize visitor levies to meet their needs while considering impacts on tourism and the local economy.

However, Arthur added that councils must “listen to businesses to make it as easy as possible for them to adopt these measures.”

UKHospitality’s executive director for Scotland, Leon Thompson, expressed concerns about the tax’s added cost for tourists.

He said it could put the country at a competitive disadvantage compared to other destinations that don’t have it.

Thompson also stressed the potential financial burden on accommodation providers.

Hotels, short-term rentals, etc., might need to invest in new IT and administrative systems to manage the levy.

Other visitor levies and tourist taxes in the UK

Manchester City was the first UK destination to impose a “Visitor Charge” of £1 per room per night beginning in April 2023.

After only a year, Manchester’s tourist tax has raised about £2.8 million, aimed at funding measures to attract more visitors.

The seaside towns of Bournemouth, Christchurch, and Poole (BCP) will next impose a visitor levy starting in July 2024.

BCP’s tourist tax, which will have tourists pay £2 per room per night, is expected to generate £12m in the next five years.

Other cities planning to impose a tourist tax are Cambridge and the seaside towns of Cornwall and Devon.

The Welsh Government has also proposed introducing similar legislation but has yet to offer a timeline. 

England, on the other hand, has no plans to propose a country-wide policy on visitor levies.  

However, once the new Electronic Travel Authorization (ETA) scheme is fully implemented, all non-visa nationals visiting the UK will have to pay extra.

The ETA is a £10 digital travel permit that is valid for two years and allows for multiple short stays of up to six months. 

This includes short visits for tourism, visiting family and friends, business, study, temporary creative work, and transit.

Currently, only visitors from Bahrain, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates must have an ETA before traveling to the UK.