Edinburgh’s Hogmanay alone has historically attracted over 150,000 attendees, with both domestic and international guests flocking to experience one of Europe’s most iconic New Year events. But as the festive season approaches, a new layer of complexity is being added to the visitor experience: the introduction of Scotland’s first live Visitor Levy.
Every winter, Scotland welcomes hundreds of thousands of visitors drawn by its world-famous festive celebrations. From the twinkling lights of Edinburgh’s Christmas Market to the thunderous countdown of Hogmanay street parties that take place from the Borders to the Highlands, the season is a cornerstone of the country’s tourism calendar.
What is the Visitor Levy and which areas will it affect?
Under the Visitor Levy (Scotland) Act 2024, local authorities now have the power to charge a levy on overnight accommodation. The legislation was designed to help councils fund services and infrastructure that support tourism and benefit both visitors and residents. Edinburgh was the first to implement the scheme, with a 5% charge on paid accommodation now live for bookings made from October 2025 for stays from 24 July 2026. Glasgow has followed suit at 5%, with the scheme due to be implemented in 2027. Meanwhile Aberdeen City Council has voted to introduce a 7% rate due to begin in 2027. Others, including Highland Council, have completed mandatory consultations and are considering the responses, whilst some, including Argyll & Bute, have opted not to progress any further with implementing a scheme at this time.
The levy’s intent is clear: to generate sustainable revenue for reinvestment in public services, cultural programming, and tourism infrastructure. But the reality of its rollout has exposed serious flaws in the current model.
Operational and reputational challenges
The percentage-based approach is proving impossible to calculate consistently across variable rates, mixed packages, and online booking platforms. Accommodation providers are being asked to separate out non-lodging costs – such as meals or cleaning fees – from the final price. While larger hotel groups may find this manageable – as their accounting systems often already separate out such non-lodging costs – the requirement presents a significant challenge for many other operators. For smaller providers, the need to isolate these charges from the final price adds operational strain and may even breach UK consumer law, which mandates clear, upfront pricing.
The levy also introduces double taxation, with VAT applied to income that operators never actually receive, as the levy is passed directly to the council. For small businesses, the administrative burden is unsustainable. Providers must register, calculate, collect, and remit the levy – often without adequate guidance or support. Despite a provision by the City of Edinburgh Council allowing operators to retain 2% of the revenue to cover costs, many say this falls short of what’s needed to manage the compliance workload.
Beyond the operational challenges, there’s a reputational risk. Scotland has long been known for its fairness and transparency to visitors, but the current scheme threatens that image. The lack of clarity, inconsistent application, and legal grey areas risk undermining trust among visitors and operators alike – especially during high-profile periods like Christmas and Hogmanay, when expectations are high and competition from other destinations is fierce.
Is there a better way elsewhere?
The solution is equally clear. A simple, flat-rate, per-night levy – paid by guests and collected digitally – would be fair, lawful, and deliverable. This model is used successfully across Europe in cities like Amsterdam, Vienna, and Barcelona, and is now being adopted in Wales. It avoids the pitfalls of percentage-based calculations, complies with consumer law, and is easy for both guests and operators to understand.
However, it’s important to acknowledge that a flat-rate approach can disproportionately impact lower-cost accommodation providers. For example, a £1 charge on a £30 hostel room represents a significantly higher percentage than the same charge on a £300 luxury hotel stay. Any future model must consider these variations to ensure fairness across the sector.
Closer to home, Manchester and Liverpool offer compelling examples through their Accommodation Business Improvement Districts (ABIDs). These industry-led schemes apply a modest flat fee – typically £1–£2 per night – and ringfence the revenue for tourism-related improvements such as marketing, events, and infrastructure. Manchester raised £2.8 million in its first year, while Liverpool generated nearly £1 million, both with strong industry support. Crucially, these models are democratically voted on by accommodation providers, ensuring transparency, local control, and targeted reinvestment.
The urgent need to reassess and reform the levy
As more Scottish councils consider their own levy schemes, the need for reform is urgent. Industry leaders are calling for an Expedited Reform Bill to replace the current model before further rollouts. The goal is not to scrap the levy, but to make it workable – one that supports the visitor economy without penalising the very businesses that sustain it.
The next steps must involve meaningful consultation with stakeholders, a reassessment of the legal and operational framework, and a commitment to aligning with international best practice that has a proven track record of success. A flat-rate levy, collected digitally and transparently, would uphold Scotland’s reputation as a world-class destination while ensuring the visitor economy continues to thrive.
Further information
Contact Adam Davies or Steven Fyfe
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