New Important Survey: Financial Impact of the Visitor Levy on Accommodation Providers

On 28 May 2024 the Visitor Levy (Scotland) Bill was passed by the Scottish Parliament and became an Act on 5 July 2024 (“Act”). The Act gives local authorities the power to require accommodation providers to charge a Visitor Levy (“Levy”) at a percentage rate of the cost of the accommodation element, before VAT, of an overnight stay. The Levy will itself attract VAT at 20% on top of the percentage set by a local authority. Various local authorities have chosen to introduce a Visitor Levy, including Edinburgh and the Highlands, with others considering the matter.

Survey Link

Find out more in the “Guidance on the Visitor Levy for local authorities”, which was released in early October.

We need your input to understand how this levy could affect small accommodation businesses.

Why Your Participation is Crucial:

• Provide real-world data on potential financial impacts
• Help create an evidence-based response to upcoming Council consultations
• Ensure the voice of the tourism sector is heard
• Influence decisions that will affect your business and local economy

Your participation in this survey will help:

• Assess the financial viability of different levy percentages for local businesses
• Understand the potential impact on VAT thresholds
• Gauge effects on pricing and competitiveness
• Evaluate administrative burdens on accommodation providers

Key points to be aware of from the guidance document:

• “Any amount charged by an accommodation provider for the visitor levy will be included in their turnover, which is used to determine if they need to register for VAT. It is at the discretion of the local authority to include or exclude businesses that fall below the VAT threshold from a VL scheme.”
• “As set out in the Act, a VL scheme will come into force at least 18 months after the date on which the local authority publishes a report, summarising the consultation responses received, and stating that it intends to proceed with the original proposal or a significant modification to a proposal. This is the implementation period.”
• “Under the Act, the accommodation portion refers only to the amount of the chargeable transaction that is attributable to the provision of the overnight accommodation.”
• “Where a cancellation happens on a booking that is pre-paid in advance, the business should refund the levy to the visitor and not remit it back to the local authority.”
• “A high proportion of accommodation businesses in Scotland are small

This survey is designed to ascertain business impacts of the Levy, in financial terms – given the content of the Act – on the tourism accommodation sector.

The results of this survey will be used to create data that accommodation operators and organisations representing those accommodation operators, can use to respond to local consultations on the Levy.

The earliest that a local authority can charge the Levy is Spring 2026, after an eighteen month period of consultation and feedback from stakeholders.

In the interim, in April 2025, self-caterers will be impacted by the removal of the Furnished Holiday Let (“FHL”) tax allowances. On 29 July 2024, the UK Government confirmed the abolition of the FHL tax regime. This included capital allowances. The abolition of the FHL regime will see an end to these one off claims and owners will lose their ability to secure their allowance safeguarding future profits. It is important, if at all possible, for self-caterers affected by the FHL tax regime removal to bear this in mind when responding to the questions in the survey.

On 28 May 2024 the Visitor Levy (Scotland) Bill was passed by the Scottish Parliament and became an Act on 5 July 2024 (“Act”). The Act gives local authorities the power to require accommodation providers to charge a Visitor Levy (“Levy”) at a percentage rate of the cost of the accommodation element, before VAT, of an overnight stay. The Levy will itself attract VAT at 20% on top of the percentage set by a local authority. Various local authorities have chosen to introduce a Visitor Levy, including Edinburgh and the Highlands, with others considering the matter.