The council has proposed a 5% charge on top of the cost of overnight accommodation, including hotels, B&Bs and short-term lets, capped at five nights, reduced from a previously proposed seven nights. Exemptions for campsites and caravan parks has also been removed over concerns it would be too complex to manage.
It follows similar schemes in cities popular with tourists such as Paris, Berlin and Amsterdam, where the tax rate for overnight visitors was recently increased to 12.5%.
All bookings will be subject to the levy – including those made by Edinburgh residents – which will be charged by the city’s roughly 4,000 accommodation providers and then passed on to the council.
Exemptions will apply to individuals receiving certain disability benefits or those without a primary residence, such as people escaping domestic abuse. However, they will be required to pay the levy initially and then apply to the council for a refund.
City councillors are expected to sign-off the plan by the end of January.
While the TVL legislation passed by Scottish Government last year said visitors aren’t liable to pay the additional charge until they check in, it’s expected many businesses will add it to the cost of rooms at the time of booking for simplicity.
A three-month grace period means from the start of May accommodation providers can begin to apply the levy to rooms booked for on and after 24 July 2026, when the scheme will officially launch.
The council estimates it could generate up to £34m in its first year, rising to £46m in 2027 and £50m by 2029. It expects to start receiving funds by the end of September 2026.
Under current proposals £5m a year will be committed to borrowing repayments, which the council says could unlock £135m for much-needed affordable housing projects. 2% cent of the annual overall funds will be set aside for three improvement projects a year in the city’s most deprived communities, with ideas put to local residents for approval in a public vote. A further 2% will be reimbursed to accommodation providers “to off-set the administrative cost incurred from operating,” the council said.
Of the remaining funds, 55% will go towards street cleaning, graffiti removal, maintaining parks, and also cover the cost of more CCTV, lighting and underground bins. This will also help to maintain popular tourist attractions and locations popular with visitors like the Old Town, Portobello Promenade and Cramond Foreshore.
Culture, heritage and events, including Edinburgh’s festivals, is set to receive 35% of the remaining income, and the final 10% is being earmarked for marketing the city to tourists and on ‘visitor management’.
The council said all decisions around investment of the income will be made democratically by councillors and informed by a visitor levy forum made up of community groups, accommodation providers, trade unions and the cultural sector.
Edinburgh Council leader Jane Meagher said it would “ease some of the pressure there is on the increasing number of visitors”.
She said: “It’s extremely exciting but it’s not a silver bullet for some of the problems we face in the city.
“We are not only leading Scotland in this respect but also leading the UK because the so-called visitor levy scheme is in other parts of the UK like Manchester but nothing like the kind of scheme we’ve got.
“That’s both exciting but also challenging because it means, of course, that we’re going to have the eyes of the rest of the United Kingdom on us which is going to lead inevitably to a lot of interest.
“Whatever we do, it’s not a question of all this money coming into the city and we can spend it as we wish, but we have to make sure it fulfils a criteria set out by the legislation.
“This high-level scheme will set out the broad parameters but inevitably the detail involved, so for example the various themes contained within the scheme, those themes will be dealt with in the coming months by the executive committees who will look in much further detail into how this scheme will operate in practice and what it can and can’t do.”