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

Section 1: Background, aims and options

Background to policy issue

The Bill seeks to make changes to the 2024 Act to give local authorities flexibility to introduce visitor levy schemes in their areas using a fixed amount (or amounts) model as an alternative to the current percentage-based model.

Currently, local authorities can set a visitor levy as a percentage of the cost of accommodation. Revenue raised is required to be used to support services and facilities that visitors use. This Bill would allow local authorities to decide that, instead of a percentage rate, a scheme could set the levy as a fixed amount (or amounts) based on the number of nights of the stay or the number of people staying in the accommodation each night of the stay. This gives local authorities more flexibility over how they design a visitor levy scheme so that it meets the needs of their local area. The specific provisions of this Bill, in terms of providing local authorities with additional flexibility regarding the model of any visitor levy, are new. However, the provisions of the 2024 Act established the discretionary power for local authorities to introduce a visitor levy scheme should they choose to do so. This Bill also makes some changes to the 2024 Act to clarify some technical points, regarding calculating the levy in third-party transactions and the basis of making returns, that came to light once authorities started to develop and implement visitor levy schemes for their areas.

Since the introduction of the 2024 Act, the Welsh Government has passed the Visitor Accommodation (Register and Levy) Etc. (Wales) Act 2025 which allows local authorities in Wales to introduce a fixed amount of levy model that charges one rate for campsite pitches and shared rooms and another rate for all other types of visitor accommodation.^[1] The UK Government is also currently consulting on the design of a new Mayoral power to create visitor levies on overnight stays in England and their proposed approach is for a percentage-based model.^[2]

The decision to introduce a new Bill to make changes to the 2024 Act was informed by engagement with local authorities, tourism businesses and organisations that represent tourism businesses. The Scottish Government has also drawn on findings from extensive consultation and engagement undertaken for the development of the 2024 Act.

Purpose / aim of action and desired effect

The primary aim of the Bill is to provide local authorities with greater flexibility over how they design a visitor levy scheme so that it meets the needs of their local area, including the needs of local accommodation providers and other tourism businesses. Providing local authorities with greater flexibility to be able to choose to introduce either a percentage-based model or a fixed amount (or amounts) model supports the Scottish Government’s commitment to empowering Local Government.

Options

The Scottish Government considered three options:

• 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.

The Scottish Government has determined that Option 3 is the only feasible option to progress in order to respond fully to stakeholder feedback and ensure that the 2024 Act works as intended. Options 1 and 2 were discounted because they do not achieve the policy objectives highlighted through extensive engagement with stakeholders. As such, the assessment below refers only to Option 3.

Sectors/Groups affected

The following groups and sectors were identified in the BRIA published alongside the 2024 Act as facing additional benefits and costs as a result of a local authority introducing a visitor levy, and the Scottish Government has determined that these same groups may be affected if a local authority chooses to introduce a fixed amount (or amounts) visitor levy model:

• local authorities that choose to introduce a visitor levy;
• accommodation providers;
• wider business community;
• visitors, both domestic and international;
• residents in local authority areas where a visitor levy is introduced; and
• the Scottish Government.