Here are answers to some common questions about the development of a Visitor Levy in Argyll and Bute (updated 3 December 2024)
What is a Visitor Levy? (updated 3 December 2024)
The Scottish Government's visitor levy legislation (Visitor Levy (Scotland) Act), passed in 2024, allows local authorities to introduce a charge on overnight stays in hotels and other short-term accommodations, to raise funds to support and sustain local services and infrastructure for the visitor economy and residents.
Many elements of the visitor levy are set in law and councils cannot change them. For example, the types of accommodation covered, that the levy is calculated as a percentage of the accommodation cost per night, not per individual guest, and that councils are legally required to consult extensively with local communities, businesses, and stakeholders before implementing the levy.
While councils can decide if they will introduce the visitor levy and on the percentage rate levied, they must reinvest funds raised to help manage the impact of tourism and enhance visitor experiences. They are also statutorily required to report annually on how this has been done.
Why are we considering a Visitor Levy?
We need to support a sustainable visitor economy in Argyll and Bute. Visitors to Argyll and Bute expect to have access to services that local people also use but there are 20 times more visitors to Argyll and Bute than there are in the total population of the area and this has an impact on the wear and tear of local infrastructure and services. Many of these services rely on our shrinking public sector budgets and are not a duty of a council to fund.
We must explore the opportunities that a Visitor Levy brings for both our tourism industry and local communities. If agreed at Council in December, the next stage will be for a 12 week consultation that allows everyone a chance to give their views on a local levy, and what they want any potential income spent on. We are exploring the levy’s potential for significant investment in the area’s visitor economy and keeping Argyll and Bute as a destination for visitors and residents. This is about being realistic, supportive and ambitious for growing tourism and quality of life in Argyll and Bute.
What benefits is a Visitor Levy intended to bring for visitors, residents and businesses?
Visitors: A visitor levy could generate millions of pounds for the local tourism economy. The money raised would be reinvested in facilities and services that are substantially used by visitors, benefitting tourists and local economies. Investment from a levy could be used to sustain and improve visitors’ experience and help keep people coming to Argyll and Bute.
Residents: Many services and facilities are shared by visitors and local communities. A Visitor Levy presents an opportunity to improve and develop these services for everyone, by securing revenue that will allow for much-needed funding in many areas. Tourism depends on public services that are not a duty of a council to deliver. With public funding more and more stretched we must consider options for delivering what tourism will need into the future. There are 20 times more visitors to Argyll and Bute than there are in the total population of the area and this has an impact on the wear and tear of local infrastructure and services. By introducing a visitor levy, visitors would contribute to providing these services.
Businesses: We have to consider the levy as a long-term support for the local tourism industry, and its potential to deliver multi-million-pound annual investment that will keep the sector competitive. Many areas in Scotland are considering introducing a levy. A visitor levy scheme represents a unique and significant opportunity to improve Argyll and Bute’s tourist offer through increased investment in the services and facilities used by both tourists and residents.
How are we developing a draft scheme for consultation?
On 20 December a special council meeting will be held to consider a draft scheme for consultation. If approved, the draft scheme will be available for comment for three months from January 2025.
We are working to develop a draft scheme that could link national legislation to benefits for the local visitor economy and residents. We have gathered pre-consultation feedback from the public and business workshops, and set up a visitor levy group that brings together council, tourism industry and business reps (for example, Argyll and the Isles Tourism Co-operative (AITC) and Highland and Islands Enterprise (HIE). Thank you to everyone who has contributed.
Where can I find further information on the Visitor Levy?
Visit Scotland has a summary of the national guidance on the visitor levy on their website, including FAQs for tourism businesses - Visitor Levy guidance (Visit Scotland).
The council website also has information about the proposed Visitor Levy Scheme in Argyll and Bute - Argyll and Bute Visitor Levy. This page is updated regularly as and when plans progress.
We have also set up a Visitor Levy Short Life Working Group to progress the potential implementation of a visitor levy in the area and minutes of every meeting can be found here - Agendas and minutes - Short Life Working Group on Argyll and Bute Council Visitor Levy.
Does the council have to introduce a visitor levy?
It is not mandatory for the council to introduce a visitor levy. However, with growing tourism pressures and shrinking public sector budgets, we need to investigate options that could help raise income locally, sustain relevant public services impacted by the tourism industry, and make improvements to the future delivery of tourism across Argyll and Bute.
Many other Scottish councils are also considering implementing a visitor levy. A levy could potentially bring significant investment to support the local tourism industry, for the benefit of local communities, businesses and visitors.
When could a visitor levy come into effect in Argyll and Bute?
The council has not yet decided whether to introduce a visitor levy. However, if a scheme is progressed, it could not come into force before the end of 2026 due to the necessary steps required, such as mandatory consultations.
How can I have my say on the Argyll and Bute visitor levy?
The next stage is for a draft scheme for consultation to go to council on 20 December 2024. If this is approved, there will be opportunities for residents, tourism businesses and organisations and anyone else who could be affected by a visitor levy to have their say from January to March 2025. We will publicise details of how to get involved.
What businesses would be included in the visitor levy?
The final scope of the proposed levy is still to be determined, but it can only apply to overnight visitor accommodation such as hotels, B&Bs, guesthouses, campsites and caravan parks, short term lets etc. The legislation does not include wild camping, campervans and cruise ship visitors.
Are there any statutory exemptions from the Visitor Levy?
Section 13 of the Visitor Levy (Scotland) Act exempts all individuals in receipt of the following UK disability benefits, payments, or allowances from paying the levy:
- Disability Living Allowance
- Disability Assistance
- Attendance Allowance
- Pension Age Disability Benefit
- Personal Independence Payment
The legislation’s scope does not apply to people who are using overnight accommodation as their only or primary residence, people staying on certain gypsy / traveller sites and people who use accommodation on overnight transport like ferries, cruise ships, or sleeper trains.
How much would visitors have to pay?
The law requires visitors to pay a percentage rate based on the accommodation cost. If the council agrees to proceed to the next stage of a Visitor Levy Scheme in Argyll and Bute, it will approve the rate and possible caps following the formal consultation process. The legislation only requires that the visitor levy be charged if a person actually spends a night at an accommodation business. Businesses would only be required to remit the levy charged to the local authority after a stay is complete.
Here is an example of what a 5% visitor levy would look like on a £100 accommodation charge:
| Description | VAT registered businesses | Non-VAT-registered businesses |
|---|---|---|
| Accommodation charge | £100 | £100 |
| 5% Levy | £5 | £5 |
| Total taxable | £105 | N/A |
| VAT on accommodation | £20 | N/A |
| VAT on visitor levy | £1 | N/A |
| Total VAT | £21 | N/A |
| Total customer cost | £126 | £105 |
How much would the visitor levy raise?
A levy could potentially bring millions of pounds of investment to support the local visitor economy. The exact amount a levy would raise would depend on the percentage amount set by the council and the scope once the statutory exemptions are taken into consideration and the levy rate, caps etc. have been agreed. As an example, early indications are that a 5% levy could raise up to £9m a year, however, the council has instigated expert work to determine more accurate predictions.
How would the proceeds of a visitor levy scheme be spent?
The legislation requires that net proceeds of a visitor levy scheme must be spent on developing, supporting and sustaining facilities and services that are substantially for, or used by people visiting the scheme area for leisure or business purposes (or both). In other words, it must be spent to benefit the local visitor economy. If the draft scheme progresses to consultation, we will invite views on how people would like it spent locally.
How would you report on how levy funds are invested?
If we introduce a visitor levy, we will need to report to Scottish Government on:
- the amount we collect
- how we will use the net proceeds (the amount collected minus costs or expenses of operating the levy)
- demonstrate that we are delivering on how we said we would invest proceeds from the levy
Would the money raised in each area be reinvested locally or would it go into a central fund for improvements across Argyll and Bute?
There are 20 times more visitors to Argyll and Bute than there are in the total population of the area and this has an impact on the wear and tear of local infrastructure and services. Funds from the visitor levy would be re-invested across the whole council area to help raise income locally, sustain relevant public services impacted by the tourism industry, and make improvements to the future delivery of tourism across Argyll and Bute.
Who would collect the levy from visitors?
Legislation requires accommodation providers to collect the levy from visitors and paying it to the council. However, much consultation and work on collection processes and systems will be required to determine how this would operate in practice, hence the long lead in time for the scheme. The aim would be to make this as simple as possible for businesses.
Would the levy be included in business turnover for the VAT threshold?
HMRC has determined that amounts charged for the visitor levy will be included in the turnover used to determine if businesses need to register for VAT.
What support would councils give to businesses collecting the levy?
This will be determined if councillors agree to proceed with the proposed levy. It would be influenced by work on collection processes and systems required to determine how the scheme would operate in practice. If agreed, it will form part of the extensive consultation.
Would a visitor levy deter visitors from coming to Argyll and Bute?
National assessments indicate no. The Scottish Government did a national assessment as part of the Levy legislation and their financial memorandum (sections 69 and 70) found “a compelling case that taxes on visitor accommodation do not appear in practice to be linked to noticeable negative impacts on visitor demand for accommodation”. It was also observed (section 79), that “59% of international travellers surveyed want to leave the places they visit better than when they arrived”.
The council is considering a levy as a potential route to supporting the tourism industry and therefore a route to sustaining the appeal of the area for visitors. The council is required to undertake full economic and equality impact assessments as part of any policy change of this type.
The levy would provide funds to enhance Argyll and Bute’s tourist offer and attractiveness over time and there are many international examples of the success of this approach. Other councils in Scotland are also considering introducing a levy.
Would money raised by a visitor levy be swallowed up by administration costs?
No. The aim of a levy scheme is to create investment for use in supporting and sustaining local tourism. The council will not know the exact costs to manage and run a potential scheme until the scope and processes of the scheme are decided. However, the Scottish Government’s assessment of the ongoing cost to councils in its financial memorandum (sections 39-45), was £190-500k a year and £110-£480k initial set up costs. This is set against an initial estimate of £9 million a year income from an Argyll and Bute wide visitor levy based on a national 5% levy.
Argyll and Bute Council is also working with a number of other councils and the national Improvement Service to explore the sharing of costs to build a joint Levy Management System that would reduce costs.
Why do we need to consider a visitor levy now that there’s £70 million available through the rural growth deal (RGD)?
RGD funding is intended in part to support Argyll and Bute as a world class tourism destination. However RGD funding cannot be spent on local services that support tourism, such as roads, waste or leisure services. RGD funding comes from the UK and Scottish Governments, as well as from the council and partners.
Conditions of the funding mean that it must be spent on development projects and cannot be used to fund maintenance or upgrades of local infrastructure and services. We therefore have to consider alternative funding sources for local public services that help make the area a must-visit destination that visitors use while in Argyll and Bute. You can find out more about the rural growth deal on the website.