Visitor Levy - questions and answers
Here are answers to some common questions about a visitor levy. (Updated 16 January 2025)
BACKGROUND
What is a visitor levy?
The Scottish Government's visitor levy legislation (Visitor Levy (Scotland) Act), passed in 2024, allows local authorities to introduce a charge on overnight stays in hotels and other short-term accommodations, to raise funds to support and sustain local services and infrastructure for the visitor economy and residents.
The Visitor Levy legislation creates opportunities to raise millions of pounds of investment to support the local tourism industry and benefit the many services that visitors and residents share. To help keep Argyll and Bute a top choice destination, we are therefore considering opportunities a levy could bring to improve the future delivery of tourism across Argyll and Bute and benefit both visitors and our local communities.
Are other Scottish councils considering introducing a visitor levy?
Yes. Several other local authorities in Scotland are also considering introducing a levy, including Stirling, Highland, and Edinburgh.
When will the council decide if it is going to introduce a visitor levy in Argyll and Bute?
At a Council meeting on 20 December, councillors agreed to run a formal 12-week public consultation exercise on a visitor levy for the area.
The consultation includes questions on what people would like funding from a levy to be spent on if introduced. Examples include services to extend the visitor season, infrastructure options from toilets to transport, and support for individual tourism businesses. The consultation asks businesses what support they would like if a levy was introduced. It also invites views on how much a levy should be; and for anyone against a levy being introduced, how they would see investment in tourism being paid for.
The consultation runs for 12 weeks until April 2025. Councillors will consider findings from it later in the year.
A visitor levy scheme could not come into force in Argyll and Bute before 2027 due to the necessary steps required. You can view the report and draft consultation on our website.
Does the council have to introduce a visitor levy?
The council doesn’t have to introduce a visitor levy. But with growing tourism pressures and shrinking public sector budgets, we need to investigate options that could help raise income to support the local tourism industry, for the benefit of local communities, businesses, and visitors.
Can council tax funds be used to invest in tourism?
From council tax and Scottish Government grant funding, the council provides many services used by visitors such as roads and car parks, electric vehicle charge points, harbours, piers, slipways, public toilets, walking paths, motorhomes waste disposal points and recycling centres. However, many of the services used by visitors are not a statutory duty of the council. With growing tourism pressures and shrinking public sector budgets, we need to investigate options that could help raise income locally, sustain relevant public services impacted by the tourism industry, and make improvements to the future delivery of tourism across Argyll and Bute.
Visitors to Argyll and Bute expect to have access to services that local people also use but there are 30 times more visitors to Argyll and Bute than there are in the total population of the area and this has an impact on the wear and tear of local infrastructure and services.
New investment is needed so that Argyll and Bute can compete as a destination and appeal to new markets.
Why do we need to consider a visitor levy now that there’s £70 million available through the rural growth deal (RGD)?
RGD funding is intended in part to support Argyll and Bute as a world class tourism destination. However RGD funding cannot be spent on local services that support tourism, such as roads, waste or leisure services. RGD funding comes from the UK and Scottish Governments, as well as from the council and partners.
Conditions of the funding mean that it must be spent on development projects and cannot be used to fund maintenance or upgrades of local infrastructure and services. We therefore have to consider alternative funding sources for local public services that help make the area a must-visit destination that visitors use while in Argyll and Bute. You can find out more about the rural growth deal on the website.
How a levy would work and what it would be spent on
Who would collect the levy from visitors?
National legislation requires accommodation providers to collect the levy from visitors and pay it to the council, for investment from there in services and infrastructure that support the visitor economy. However, much consultation and work is needed to see how this would operate in practice, so a levy scheme could not be introduced before 2027. We would aim to make this as simple as possible for businesses and have included a question in the consultation that asks businesses what support they would likely need if a scheme is introduced. Depending on the agreed uses of the levy, accommodation providers could be eligible for financial help and training to offset the administrative costs they would be expected to incur in complying with a visitor levy scheme.
How much would a visitor levy raise?
A levy could potentially bring millions of pounds of investment to support the local visitor economy. The exact amount a levy would raise would depend for example on the rate a levy was set at, any caps to the number of nights a levy would apply for, exemptions from paying a levy etc. Indications are that a levy set at 5% could raise over £9 million gross per year (before estimated set up costs of £215k and ongoing annual running costs estimated to be £460k, or other deductions such as for exemptions).
What support would be available for accommodation providers?
The consultation includes a question for businesses about what support they would likely need if a scheme was introduced.
This could possibly be for example financial help and training to offset the administrative costs they would be expected to incur in complying with a scheme.
Would the levy be included in business turnover for the VAT threshold?
The HMRC has determined that amounts charged for the visitor levy would be included in the turnover used to determine if businesses need to register for VAT. This could bring those close to the VAT threshold over the limit, triggering mandatory VAT registration. Industry representatives on the Shadow Visitor Levy Forum are proposing that the industry liaise with the Scottish Tourism Alliance to lobby the HMRC on their behalf on this issue.
How much would visitors have to pay?
The law requires visitors to pay a percentage rate based on the accommodation cost. If the council agrees to proceed to the next stage of a Visitor Levy Scheme in Argyll and Bute, it will approve the rate and possible caps following the formal consultation process. The legislation only requires that the visitor levy be charged if a person actually spends a night at an accommodation business. Businesses would only be required to remit the levy charged to the local authority after a stay is complete.
Here is an example of what a 5% visitor levy would look like on a £100 accommodation charge:
| Description | VAT registered businesses | Non-VAT-registered businesses |
|---|---|---|
| Accommodation charge | £100 | £100 |
| 5% Levy | £5 | £5 |
| Total taxable | £105 | N/A |
| VAT on accommodation | £20 | N/A |
| VAT on visitor levy | £1 | N/A |
| Total VAT | £21 | N/A |
| Total customer cost | £126 | £105 |
Are there any statutory exceptions from the visitor levy?
Section 13 of the Visitor Levy (Scotland) Act exempts all individuals in receipt of the following UK disability benefits, payments, or allowances from paying the levy:
- Disability Living Allowance
- Disability Assistance
- Attendance Allowance
- Pension Age Disability Benefit
- Personal Independence Payment
The legislation’s scope does not apply to people who are using overnight accommodation as their only or primary residence, people staying on certain gypsy / traveller sites and people who use accommodation on overnight transport like ferries, cruise ships, or sleeper trains.
Would a visitor levy deter people from visiting Argyll and Bute?
Visitor levies are intended to raise investment to sustain and improve what an area can offer its visitors over time and there are many international examples of the success of this approach.
The Scottish Government BRIA Visitor Levy Bill: business and regulatory impact assessment found that - “Evidence from cities that have introduced these types of taxes recently show that generally growth in visitor numbers has continued after the introduction of these taxes”.
Would money raised by a visitor levy be swallowed up by administration costs?
No. The aim of a levy scheme is to create investment for use in supporting and sustaining local tourism. We won’t know the exact costs of managing and running a potential scheme until the scope and processes of the scheme are decided. However, the Scottish Government’s assessment of the ongoing cost to councils in its financial memorandum (sections 39-45), was £190-500k a year and £110-£480k initial set up costs. Indications are that a levy set at 5% could raise over £9 million gross per year (before estimated set up costs of £215k and ongoing annual running costs estimated to be £460k, or other deductions such as for exemptions) for services and infrastructure supporting Argyll and Bute’s visitor economy and residents. We are also working with a number of other councils and the National Improvement Service to explore sharing the costs to build a joint Levy Management System that would reduce costs.
How visitor levy funds would be used
Who would decide what the visitor levy funds would be spent on?
If the scheme progresses, we would establish Shadow and main Visitor Levy Forums. These forums would include representatives from local businesses and communities and would provide an avenue for stakeholders to influence how funds are allocated. This participatory approach would help ensure that projects funded by the levy address both visitor and resident needs. The council would be required to report annually to the Scottish Government on how the fund are re-invested to help manage the impact of tourism and enhance visitor experiences.
What types of things would the levy fund?
Funds from a visitor levy would have to be invested in services and projects to sustain and enhance the visitor experience and help keep people coming to the area. Consultation questions include asking people what they would like funds to be spent on.
Depending on the agreed uses, this could include:
- Improved infrastructure that benefits tourism. For example, recreational facilities, public toilets, signage, facilities in parks and beaches, roads and pavements.
- Support for tourism businesses to develop their products and services. For example, grants, training, advice, digital capability.
- Culture and heritage opportunities, including events.
- Improved step ashore facilities for people arriving by sea.
- Better inter-island and destination connectivity to make it easier to travel between islands and destinations.
- Eco-friendly initiatives and net-zero projects that would encourage responsible tourism to help protect Argyll and Bute’s natural and cultural heritage.
Would the money raised in each area be re-invested in that area or would it go into a central fund?
Funds from the visitor levy would be re-invested across the whole council area to help raise income locally, sustain relevant public services impacted by the tourism industry, and make improvements to the future delivery of tourism across Argyll and Bute.
How would you report on how levy funds are invested?
If the council introduces a visitor levy we will need to report to the Scottish Government on the amount we collect, how we will use the net proceeds, and demonstrate that we are delivering on how we said we would invest proceeds from the levy.
How can I give a view on a visitor levy?
You can get involved and have your say on the draft Visitor Levy Strategy during the 12-week consultation that will run from Thursday 16 January until Thursday 10 April 2025. The consultation is an opportunity for businesses, residents, and visitors to have their say on a visitor levy and asks questions such as:
- What services would people want income from a levy to be spent on if one was introduced?
- What support would tourism businesses like with managing a levy?
- How much should a levy be?
- For anyone against a levy, how else would they see the visitor economy being funded in future?
Thank you to everyone who has already given their feedback during the pre-consultation. We received over 1,200 responses and these helped to develop the draft strategy.