How Much Will Edinburgh’s Tourist Tax Cost You?

The City of Edinburgh has joined a growing list of European destinations with a 5% tourist tax. The revenue generated from this tax, expected to reach £45-50 million annually by the 2028/29 financial year, will be reinvested in local services and facilities.

Proponents argue that the tax will raise vital funds for improvements, while others claim it could deter visitors and harm the city’s economy. To mitigate potential concerns, exemptions have been made for vulnerable populations such as asylum seekers, refugees, disability benefits recipients, and individuals at risk of domestic abuse or homelessness.

The tourist tax applies to overnight stays in various types of accommodation, including hotels, bed-and-breakfasts, self-catering apartments, and vessels or boats moored in one location. Those booking short-term rentals through platforms like Airbnb will be subject to the tax, but long-term renters may face uncertainty regarding their liability.

Hotel occupancy rates have reached as high as 90.6% in the city center during August 2025, raising concerns about the potential impact on Edinburgh’s tourism industry. However, proponents argue that the funds generated will benefit both residents and tourists through initiatives such as public realm improvements at Hunter Square, Cramond, and Portobello.

A £5 million fund has been allocated for building 472 homes between the 2026/27 and 2028/29 financial years, while additional funds will go towards restoring Leith Theatre. A review of the overall scheme is planned for 2029, providing an opportunity to assess its effectiveness and make necessary adjustments.

As Edinburgh’s popularity grows, with an estimated 3.85 million attendances at events across August, the pressure on local infrastructure is mounting. While the introduction of a 5% tourist tax marks an exciting step towards addressing these concerns, its true impact remains uncertain.