Visitor Levy (Amendment) (Scotland) Bill: Business and Regulatory Impact Assessment (BRIA)

Executive summary

Issue and why it needs to be addressed

The 2024 Act enables local authorities to introduce a discretionary visitor levy based on a percentage of accommodation costs. The Bill seeks to address feedback from local authorities and tourism businesses during early implementation of the 2024 Act by providing greater flexibility to introduce a fixed amount (or amounts) model. It also clarifies how to calculate the levy where there are third-party bookings and the accommodation provider may not know the final sale price of the accommodation and therefore may be unable to make accurate returns to the local authority.

Intended outcomes

The Bill aims to empower local authorities by allowing them to choose between a percentage-based model and a fixed amount (or amounts) model for local visitor levy schemes. It also clarifies how accommodation providers should calculate the levy due where there are third-party (indirect) accommodation sales and ensures effective implementation of the existing legislation.

Options

In deciding how to respond to the requests for additional flexibilities and how to resolve the implementation concerns, Scottish Ministers considered the options below:

• Option 1: Rely on existing legislation – this was not the preferred approach because stakeholders highlighted the need to improve clarity and provide flexibility on the basis of the levy which could not be delivered without legislative change.
• Option 2: Make further provisions by regulations – this was not the preferred approach because, although regulations could address some of the operational matters, they could not provide flexibility on the basis of the levy.
• Option 3: Amend the 2024 Act through primary legislation – this was the preferred approach because it provides the flexibility being sought on the basis of the levy and introduces improvements that support operational implementation.

Sectors affected

• Local authorities that choose to introduce a visitor levy.
• Accommodation providers (including small businesses).
• Booking platforms and travel agencies
• Wider tourism sector and supply chains.
• Visitors and residents in affected areas.

Engagement completed, ongoing and planned

The Scottish Government engaged with COSLA, individual local authorities, and tourism businesses, including the Scottish Tourism Alliance. Internal engagement included Tourism Policy, and Local Government Finance. No new public consultation was undertaken, but evidence from the 2024 Act consultation informed the Bill.

Ongoing engagement with COSLA, local authorities, including those which decided to introduce visitor levy schemes under the 2024 Act, and with industry bodies will be ongoing throughout the Bill’s passage in Parliament. This work will continue beyond the Bill to ensure effective implementation of the legislation.

Anticipated impacts (intended and unintended, positive and negative) and mitigating actions

• Positive: Greater flexibility for local authorities; potential for levy revenues to support local infrastructure and visitor facilities.
• Negative/unintended: Possible complexity for businesses operating across multiple local authority areas; regressivity risk of schemes setting a single fixed amount of levy; compliance costs for booking platforms.
• Mitigation: Local authorities can set differential rates and share best practice; VisitScotland guidance will support consistency.

Enforcement / compliance

The Bill does not create the visitor levy; this was introduced by the 2024 Act and is a discretionary power. Local authorities remain responsible for scheme design and enforcement. The Bill clarifies how the levy should be calculated where there are third-party accommodation sales. The enforcement powers established by the 2024 Act will continue to apply to the amended legislation.

Recommendations / implementation plans

Option 3 is recommended. The Scottish Government will support local authorities through guidance and best practice sharing. Implementation remains at the discretion of local authorities.

Evaluation and monitoring of implementation / review of BRIA

The 2024 Act requires a statutory review of the operation of the Act, three years after the first visitor levy scheme takes effect. This review which will include the amendment provisions, will take place in summer 2029, and will assess impacts on businesses and communities.