Accommodation providers in Edinburgh are struggling to be ready to implement a new tax on tourists, says a small business group.

They are expected to start applying the surcharge in May under the plans due to be voted on by councillors on Friday.

But the Federation of Small Businesses Scotland today warned there is considerable concern about the ability of B&Bs and hotels to install the booking system ahead of the deadline.

Garry Clark, FSB’s development manager for Edinburgh and the East of Scotland, said: “There is an expectation that B&Bs and other small operators will start applying the levy to advance bookings in 15 weeks’ time, but the booking platform which is being introduced for the purpose is still in development.

“There simply isn’t enough time to meet the deadlines laid out by the city council without risking significant disruption to the businesses who will have to apply the charge and their customers.

“We know from experience that delivering new IT systems can be fraught with difficulties. It is vital the new platform which is intended to be used in other local authority areas who adopt a Visitor Levy is thoroughly tested before bookings go live.”

The city council has declared its aim is to introduce the Visitor Levy as quickly as the enabling legislation will allow and by introducing it in early summer will enable the city to cash in on the revenue-generating festivals.

There are also more big concerts being held in the city with Robbie Williams and the Kaiser Chiefs among the big attractions. Recent performances by Harry Styles and Taylor Swift were big money-spinners for the city and a visitor levy will generate millions to be help with tourism-related investment and other benefits.

Mr Clark added: ‘We understand the financial pressures local authorities are under and the importance of the new revenue stream to the council, but that shouldn’t be its priority, it should be ensuring as far as possible that the launch goes without a hitch.

“Business sentiment towards the Visitor Levy has shifted. Many small businesses have warmed towards the idea, recognising the vital investment it can bring to improve infrastructure and services for the good of visitors, residents and local businesses alike.

“However, there are still unanswered questions about the way in which the levy is being introduced in Edinburgh, including whether its plans for investment in housing and participatory budgets are legally robust.”

The city council confirmed that, if confirmed, the visitor levy will apply to bookings made on or after 1 May 2025 for overnight stays in Edinburgh on or after 24 July 2026. It said it is not developing a booking platform, but a tax collection platform and is confident this will be available for accommodation providers to register on in early 2026

A spokesperson said: “While there is no requirement for businesses to collect the levy at the point of booking, with accommodation providers able to choose how best to implement it according to their own business practices, visitors must be made aware of the final price of their accommodation in order to comply with UK consumer laws.

“Accommodation providers will only need to submit a return and pay the council the required levy amount from the end of September 2026 and businesses will be given reasonable time to complete this return.

“We’ve been working with partners to develop the levy collection platform, and we expect to run testing and pilot activity next winter, in plenty of time for the levy to come into force.”

It also stressed that:

* Accommodation providers won’t have to submit their levy returns until the end of September 2026

* Accommodation providers will have until 1 May to update their rates for 24 July 2026 onwards to include the levy rate in order to comply with UK consumer law which requires the final price paid to be advertised

* The council will publish information on this once the final scheme has been agreed by elected members on 24 Jan 2025

* The council is engaging with booking platforms, accommodation providers and the visitor economy as well as working with partners including Visit Scotland to co-develop further business specific FAQs, more information is available on its webpage: Visitor Levy Guidance I VisitScotland.org