Could Edinburgh’s new tax hurt its tourism appeal?

The Edinburgh Visitor Levy came into force for eligible overnight stays on July 24, 2026, just on time as August brings to Edinburgh a bunch of events such as the Edinburgh International Festival, Festival Fringe, Art Festival, Book Festival, Film Festival and Royal Military Tattoo.

The city charges 5% on the accommodation portion of the bill, before VAT, for a maximum of five consecutive nights.

A £100 hotel room therefore attracts a £5 levy. A £200 room adds £10. A £100-per-night room for five nights, costing a total of £500, would end up as £525 with the levy applied – not including VAT. But booking that same room for 10 nights, at a cost of £1,000, would only add up £25, with the tax.

The new tax applies to hotels, hostels, B&Bs, guest houses, self-catering apartments, short-term rentals, campsites and some accommodation on boats and vehicles.

It is important to note that the Edinburgh charge is 5%, not a flat £5 tax.

The timing is potentially sensitive. Edinburgh is already one of the UK’s most expensive city-break destinations, while August brings the Edinburgh Fringe and a series of major cultural festivals that put huge pressure on accommodation capacity… and prices.

Tourism representatives have warned that the levy could damage the city’s price competitiveness. The Scottish Tourism Alliance has described the visitor levy as a threat to Scotland’s competitiveness and warned it could become a “tipping point” for some visitors, particularly as the domestic market remains under pressure.

Edinburgh City Council takes the opposite view. It says there is no evidence that visitor taxes necessarily reduce tourism and argues that visitors should contribute toward the infrastructure and services they use.

The money will fund city operations and infrastructure, culture, heritage and events, and destination and visitor management. A new city-centre policing unit is already being supported by levy revenue.

Edinburgh not alone
Edinburgh is not a unique case. In fact, UK accommodation-tax landscape is expanding. Manchester already has a £1-a-night charge covering participating hotels and serviced apartments through its Accommodation Business Improvement District. Liverpool also operates an Accommodation BID charge of £2 per occupied room per night.

In Scotland, Glasgow is preparing a 5% visitor levy, while Aberdeen has approved plans for a 7% levy from April 2027.

Wales is also moving toward local visitor taxes. Cardiff will introduce a levy from April 1, 2027, set at £1.30 per person per night for most accommodation and 75 pence for campsites and shared hostel rooms. Other Welsh councils can choose to introduce their own schemes.

England is also moving toward giving local authorities greater powers to introduce visitor levies.