Edinburgh councillors have approved a visitor levy, or tourist tax, but have agreed to extend the deadline for applying it to bookings.

From July 2026 all overnight accommodation providers will need to add 5%, payable for a maximum of five consecutive nights.

It will add £7.50 – about the price of a pint of beer in Edinburgh – to a room costing £150 per night.

Following concerns expressed by small business owners, councillors agreed to push back the deadline for applying it to bookings from 1 May to 1 October to allow them more time to install the necessary systems.

Council leader Jane Meagher called it an “historic moment for Edinburgh” and said it will raise up to £50 million to re-invest in improving the city, including cleaner streets, removing grafitti and repairing roads, all of which benefit residents as well as the visitor experience.

“Introducing this ground-breaking visitor levy means realising a once in a lifetime opportunity to invest tens of millions of pounds towards enhancing and sustaining the things that make our city such a great place to visit – and live in – all year round.

“The scheme has been many years in the making and I’m grateful to council officers, businesses and residents who have helped shape it, every step of the way. Its introduction is declared today with a huge amount of backing, not least from local residents.

“At all stages we’ve listened to and taken account of the views of industry and other stakeholders.

“It’s in this spirit that we’ve also extended the amount of time hoteliers and small businesses will have to prepare for the changes that are coming in.”

She said the council will be establishing a Visitor Levy Forum with an independent chair to oversee allocation of the proceeds.

Neil Ellis, chairman of the Edinburgh Hotels Association, welcomed the introduction of the levy “for its intended use of improving the experience of all visitors – local, national or international – through additional spending.

“This is a fantastic opportunity to further enhance Edinburgh’s reputation on the World stage as a must visit destination.”

Business reaction largely positive, but some remain concerned

Donald Emslie, a representative of Edinburgh’s tourism industry, said: “This new income stream presents a unique opportunity to generate significant funds for the city’s long-term development.

“The levy’s potential to generate transformative funds for the benefit of all who live, work, and visit Edinburgh is well recognised and I’m pleased to see a decision made to declare a scheme which will not only support spending on city operations and infrastructure, but sustain Edinburgh’s cultural offering and destination and visitor management.”

UKHospitality Scotland has said the decision to delay the booking deadline was critical to give businesses and booking platforms an appropriate amount of time to implement new systems to collect levy funds.

Leon Thompson, executive director, insisted the levy was detrimental to the city. He said: “Not only has Edinburgh’s visitor levy been confirmed, but so too has the hit to the city’s competitiveness as a leading tourist destination.

“Our fundamental concern has always been that this levy will only serve to make visitors trips to Edinburgh more expensive, ultimately reducing their spending in the wider visitor economy and deterring future visits.”

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said: “We are extremely disappointed that Edinburgh Council has failed to properly appreciate the widespread concerns of our sector who are the ones responsible for administering this tax.”

The levy will apply to:

• Hotels;
• Hostels;
• Guest houses;
• Bed and breakfast accommodation;
• Self-catering accommodation, including short-term lets;
• All paid accommodation on caravan sites and campsites, including temporary tent and campervan pitches;
• Accommodation in a vehicle, or on board a vessel, which is permanently or predominantly situated in one place; and
• Any other place at which a room or area is offered by the occupier for residential purposes otherwise than as a visitor’s only or usual place of residence.

Certain accommodation providers may apply to the council for a discretionary site exemption if they meet both of the following criteria:

• The property is occupied by a charity or trustee of a charity; and
• Overnight stays must be wholly or mainly for charitable purposes.

The Visitor Levy is payable by anyone staying in accommodation which is not their only or usual place of residence (temporary or otherwise).

Individuals who do not have an only or usual place of residence are therefore not required to pay the levy. This includes people who are homeless, refugees and asylum seekers and people whose homes are unfit or unsafe for habitation.

Individuals who are exempt or excluded will need to pay the levy to the accommodation provider and request reimbursement from the council, unless their accommodation has been arranged and paid for directly via the council.

Will other councils follow Edinburgh?

Other local authorities are expected to introduce their own levies. Highland council believes could raise £10 million a year, while Argyll and Bute is consulting on its plans through to April.

Stirling voted last month to look at the idea over the next 12 months with a view to introducing a tax in 2027. Orkney, East Lothian, Western Isles, West Dunbartonshire and East Ayrshire are also exploring the idea.