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Edinburgh visitor levy and VAT: do I charge the levy on the price with or without VAT?
If you are VAT registered, work out the 5% Edinburgh visitor levy on the accommodation price without VAT. If you pass the levy on to the guest, you then add 20% VAT to the levy itself. If you are not VAT registered, there is no VAT to take off, so the levy is 5% of the full accommodation price the guest pays.
What does "net of VAT" mean?
The council's guide says the levy is "5% of the accommodation only portion of the transaction, net of VAT". Net of VAT just means the price with the VAT taken out. VAT (value added tax) is the 20% tax that VAT registered businesses add to their prices and pay to HMRC. To take it out of a price that includes 20% VAT, divide by 1.2: a £150 room becomes £125.
Do I have to charge the levy if I am below the VAT threshold?
Yes. The levy applies to all overnight accommodation in Edinburgh, including providers whose turnover is below the VAT threshold. Most Airbnb hosts are not VAT registered, and they still charge 5%, just on the full price.
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A worked example: a guest house in Leith
A VAT registered guest house in Leith sells a double room, room only, at £150 a night including VAT. A couple books 4 nights from 10 to 14 November 2026: £600 including VAT. The owner passes the levy on to the guest.
| Item | Amount |
|---|---|
| Room price including VAT | £600.00 |
| Room price without VAT (£600 ÷ 1.2) | £500.00 |
| Levy at 5% of £500 | £25.00 |
| VAT on the levy (20% of £25) | £5.00 |
| Guest pays in total | £630.00 |
| Owner keeps 2% of the levy | £0.50 |
| Owner pays the council | £24.50 |
The £5 VAT on the levy goes to HMRC on the normal VAT return, not to the council. If the same guest house were not VAT registered and charged the same £600, the levy would be 5% of £600, which is £30.00, with no VAT on top. The guest checks out on 14 November, so this stay goes in the October to December 2026 return: submit by 30 January 2027, pay by 13 February 2027.
Do I add VAT to the levy?
Only if you are VAT registered and pass the levy on to the guest. The national guidance says the levy counts as part of your turnover and is liable for VAT. The council gets the levy without VAT, and HMRC gets the VAT on it.
The official VisitScotland example uses a 3% rate: a VAT registered B&B charges £480 including VAT for 6 nights, with breakfast valued at £90. The room part is £390 with VAT, £325 without. The levy is 3% of £325, which is £9.75, plus £1.95 VAT. The same B&B, not VAT registered, would pay 3% of £390, which is £11.70.
If a guest later claims the levy back from the council because of a disability benefit, the council refunds the levy only, not the VAT on it.
Does the levy count towards the VAT threshold?
The national guidance says the levy should be included as turnover. If you charge it to guests, it adds to the money you take, so keep an eye on your total if you are close to the threshold, and ask an accountant or HMRC if you are unsure. The council says VAT questions belong to HMRC and it cannot advise on single cases.
What to do, step by step
- Check whether you are VAT registered. If you have no VAT number, you are not.
- For each booking, take the accommodation part only: leave out breakfast, separately charged parking and optional extras, but keep standard cleaning in.
- VAT registered: divide by 1.2, then take 5% of the first 5 nights. Not VAT registered: take 5% of the full price.
- If you pass the levy on and you are VAT registered, add 20% VAT to it on the guest's bill and include that VAT on your VAT return.
- On visitorlevy.scot, enter the accommodation money for each month, keep your 2%, pay the rest by the payment date, and keep your records for 5 years.
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General information, not tax or legal advice. Sources: City of Edinburgh Council, Edinburgh Visitor Levy Scheme: information for accommodation providers (version 2.1, September 2026), "Calculating the levy" and "VAT" sections; VisitScotland, Guidance on the Visitor Levy for Local Authorities (August 2026), chapter 10 worked examples; City of Edinburgh Council, visitor levy information for businesses; Visitor Levy (Scotland) Act 2024, section 5. Last checked 8 October 2026. Nero Engine Group Ltd, company 16521432, 66 Paul Street, London EC2A 4NA. Privacy · Terms