Edinburgh’s local authority has announced a groundbreaking move to introduce a tourist tax, officially named the “Transient Visitor Levy” (TVL), which is expected to raise substantial funds for the city’s long-term development.
The levy, which will apply to overnight stays, is projected to generate nearly £50million annually, marking a significant boost to the city’s finances and its ability to fund urban improvements.
Starting in 2026, a 5% surcharge will be added to the cost of accommodations such as hotels, bed and breakfasts, and short-term rentals, with the tax to be capped at seven nights per stay.
The new initiative is designed to help manage the growing influx of visitors while providing Edinburgh with additional resources to address its infrastructure needs.
The funds raised through the tax will be allocated to key areas, including affordable housing, transport upgrades, cultural initiatives, and environmental sustainability projects, helping to enhance the overall quality of life for residents and the experience of visitors.
It aligns Edinburgh with other popular tourist destinations across Europe, including cities like Amsterdam and Berlin, which already have similar tourist taxes in place.
Edinburgh’s city leaders, including Council Leader Cammy Day, have highlighted the transformative potential of the TVL.
Mr Day says the new tax could provide Edinburgh with its most significant financial uplift in decades, and believes it will help make the city a more attractive, sustainable, and liveable place.
Critics of the tax say it will dissuade tourists from visiting, which would have a knock-on effect on the city’s businesses.
Marc Crothall, Chief Executive Officer of the Scottish Tourism Alliance, said it would hit those already feeling the squeeze of the cost-of-living crisis. “It remains a very contentious matter,” he told travel news site Skift.
Meanwhile, tourism operators worry that adding the levy could make Edinburgh less affordable for both international and local visitors, potentially leading to a decline in footfall.
To ease the transition, the council plans to roll out the tax in phases.
From May 2025, the TVL will apply to all bookings made for accommodation after that date.
The transition period is intended to give businesses enough time to adjust and notify their customers in advance, also allowing operators to incorporate the tax into their pricing structures in a way that minimises disruption to their operations.
If things go to plan, the tax will be in force just as Edinburgh’s famous Festival Fringe, one of the largest arts festivals in the world, kicks off.
This decision to implement a tourist tax reflects a broader global trend of cities using such levies to manage the impact of mass tourism, fund sustainable practices, and address infrastructure challenges.
Last year, the Senedd, Wales’ parliament, announced that a £1.25 per night tourism tax could be introduced from 2027, in order to overcome unsustainable visitor numbers in its coastal regions.
While the charge would be shifted onto guests at hotels, B&Bs and self-catered accommodation, a lower rate of 75p was suggested for hostels and campsites.