New visitor levies in Edinburgh and beyond aim to fund local services and manage tourism impact
Category: Business
If you’ve wandered through the picturesque streets of Edinburgh or enjoyed a sunny day at the beach in Barcelona, you might have noticed an extra charge on your accommodation bill. This is known as a tourist tax or visitor levy, a fee added to overnight stays that has become increasingly common in popular destinations across Europe. As the UK government prepares to empower mayors in England to introduce similar levies, the hospitality industry is bracing for impact, with opinions sharply divided on the potential benefits and drawbacks.
The core question surrounding this debate is whether introducing a tourist tax in the UK will help fund local services and manage the pressures of increasing tourism or if it will deter visitors and harm local economies. Recent developments in cities like Edinburgh, Manchester, and Liverpool provide a glimpse into the future of tourism funding in the UK.
In July 2026, Edinburgh became the first city in Scotland to implement a city-wide visitor levy, introducing a 5% surcharge on overnight stays. This move follows the passing of the Visitor Levy (Scotland) Act in September 2024, which allows councils to impose such taxes to support local services. Meanwhile, the UK government has recently passed legislation allowing English mayors to introduce similar measures, with cities like Manchester and Liverpool already charging small fees through legal loopholes. As the hospitality sector reacts, the question remains: will these levies support local economies or drive tourists away?
Visitor levies, often referred to interchangeably with tourist taxes, are fees added to the cost of short-term accommodation. Typically collected by hotels or rental properties on behalf of local authorities, these funds are reinvested into city resources, from infrastructure improvements to cultural projects. The visitor levy can take various forms, such as a flat rate per room per night or a percentage of the nightly fee. Exemptions may apply for children, medical travelers, and victims of domestic violence, ensuring that the burden of the tax does not unfairly impact vulnerable populations.
Internationally, cities like Amsterdam, Barcelona, and Venice have long implemented tourist taxes, with Amsterdam charging a hefty 12.5% on overnight stays. Surprisingly, visitor numbers in these destinations have continued to rise, challenging the notion that such taxes deter tourists. In fact, a study published in the journal Tourism Management in 2025 indicated that Manchester’s £1 per room per night levy has had “no significance” on hotel occupancy rates, raising £10.5 million in its first three years. This revenue is earmarked for local cultural initiatives, including events like the Brit Awards.
Likewise, Liverpool introduced a £2 per night visitor levy in June 2025, generating over £2 million for projects in sports, culture, and conferencing. Bill Addy, CEO of Liverpool BID Company, emphasized the positive reception of the levy, stating, “We are not using it to deter tourists; it’s important to us that it’s a minimal, fixed fee that is easily communicated and absorbed.” These examples suggest that, when implemented thoughtfully, visitor levies can provide a financial boost to local economies without significantly hindering tourism.
Not everyone is on board with the idea of tourist taxes. UKHospitality, a leading trade body, estimates that a proposed 5% tax on overnight stays in England could lead to 12 million fewer visits and result in 33,000 job losses in the hospitality sector. Such fears are echoed by many local businesses in regions like the Lake District and Yorkshire Dales, which rely heavily on tourism. They worry that imposing a tax will push visitors to areas that remain levy-free, such as parts of England’s east coast, where local mayors have expressed opposition to the proposals.
Allen Simpson, chief executive of UKHospitality, voiced concerns about the impact of Edinburgh’s new charge, claiming it was already “having damaging effects” on the city. Conversely, the Edinburgh Tourism Action Group argues that it is “too early to draw any meaningful conclusions” about the levy’s impact on visitor numbers, noting that cities like Manchester have not seen declines in tourism.
Looking ahead, Scotland is set to see more cities adopt visitor levies, with Glasgow and Aberdeen planning to introduce similar measures in 2027. Wales will also implement overnight levies by 2027, following the passing of the Visitor Accommodation Bill in July 2025. This act empowers councils to impose taxes on overnight stays, with the funds aimed at improving local facilities and infrastructure.
As the UK government moves forward with its plans, the potential for local authorities to benefit from a share of tourism revenue is becoming clearer. Henri Murison, chief executive of the Northern Powerhouse Partnership, argued that the current system, where all tax paid by businesses goes to central government, is outdated. “It’s just wrong,” he stated, emphasizing the need for local authorities to retain some of the revenue generated by tourism.
With the introduction of visitor levies, cities hope to manage the challenges posed by rising tourist numbers and the strain they place on local resources. As Zoë Billingham, chief executive of IPPR North, pointed out, “This is a real way to share in the benefits of tourism growth in this country.” If implemented judiciously, visitor levies could provide a sustainable solution to funding local services and enhancing the tourist experience.
The debate surrounding tourist taxes in the UK is far from settled. As cities like Edinburgh, Manchester, and Liverpool pave the way for new funding models, stakeholders must weigh the potential economic benefits against the fears of deterring visitors. With the government now giving local leaders the power to introduce such measures, the next few years will be telling in how these policies shape the future of tourism in the UK.