Visitor Levy could hit small provider revenues

£4 a night proposal could net £8m

A Visitor Levy for Perthshire could hit small accommodation provider revenues by edging some over the VAT threshold.

That is the fear presented to Perth and Kinross councillors by Scotland’s accommodation sector following news of the consultation on a draft £4 per night tariff on visitors.

The proposed scheme, which will exclude council tax registered residents in Perth and Kinross, was opened for public consultation on Wednesday.

Should the Council decide, following the consultation, to approve a Visitor Levy, it would be introduced following a statutory 18-month ‘preparation’ period.

Questions

Whilst the local authority predicts a year-round £4 per night fixed rate levy would net an additional £8m income for tourism related re-investment, Scotland’s accommodation sector has questioned the figures.

Furthermore, they have written to councillors to state the case for smaller accommodation providers who could be pushed over the VAT threshold because of the levy.

The overnight fee will be collected by the accommodation providers themselves before being paid to Perth and Kinross council each quarter through a special Scotland-wide digital levy portal.

While 2.5% of monies received will be retained by providers for administering the scheme, the extra room levies could push business turnover beyond the current UK VAT threshold of £90k per year.

Potentially significant

“There is a potentially significant consequence for small accommodation businesses operating close to the VAT registration threshold,” explained Fiona Campell, Chief Executive of Association of Scotland’s Self-Caterers.

“Some businesses deliberately manage their trading weeks or availability to remain below the threshold.

“If collecting the Visitor Levy brings them towards VAT registration sooner, they may decide to close availability earlier or turn away bookings.

“That would simply mean lost accommodation income. Fewer available bed nights can mean less visitor expenditure in local restaurants, shops, attractions, activities and other businesses.”

Predicted drop

An independent Economic Impact Assessment by the Moffat Centre predicted the Levy could mean less visitor nights, with latest growth figures suggesting visitor income equated to £964m in 2024, with 2.9m visitors.

While predicted takings from the scheme, which will also apply to caravan and camping sites, would outweigh such losses, tinkering with the visitor economy carries risks as well as opportunities with rural and Highland Perthshire, in particular, heavily dependent on tourists.

Some locations are already expensive and, with cost-of-living pressures and global geopolitics re-balancing the market, there is a duty upon the local authority to think clearly and in the longer-term interest.

Compared to the Scottish national average, accommodation and food accounts for 12.9% of employee jobs compared to 8.3% nationally- an indication of an economic landscape interlinked by tourism.

Differences between Perthshire and Highlands

Highland Council announced their draft proposal on the same day, with some key differences.

Their scheme of £5 per night will omit the months of December, January and February, with campsites charged at £2 per night.

Their providers will receive 5% of all takings for administering the Highlands levy but there is no reduction for locals, something the Perthshire proposal has been praised for.

Ring-fenced

Councillors in Perth and Kinross say levies will be ring-fenced for tourism-related services which attract visitors but will also help cope with visitor impacts such as better destination marketing and signage, more public toilets and car parks and additional rangers in beauty spots which have seen negative visitor impacts in recent years, especially during the pandemic.

The consultation is open, here, and closes on November 11th. There will be 7 drop-in sessions at varying locations during the month of September

*A Perthshire Business News survey, conducted in August 2025, found 65% of respondents opposed the Levy, with accommodation providers almost unanimously against it.

The caveat is that the survey was predicated on the levy collecting a percentage of an overnight stay (1 to 7%) as the fixed rate option was not available at the time of the Survey. You can see the Survey results here.