Edinburgh visitor levy: the commission question, and why it needs settling

In short: the biggest open question in the Edinburgh Visitor Levy is not a rounding rule or a reporting date. It is whether the commissions and fees a provider pays to sell its accommodation can be deducted before the 5% is applied. The City of Edinburgh Council's guide says, in effect, no for agency bookings. VisitScotland's national guidance says commission "may or may not be included". On one booking the difference is a few pounds. Across the city's hotels, guest houses and short-term lets it could be millions a year in levy receipts, and two providers charging the same price can currently report different amounts. This article sets out what each document says, works through two examples, and explains why the position needs a coordinated, legally supported answer.

Three kinds of fee, one unanswered question

Almost every Edinburgh provider pays someone to help sell its rooms. The fees fall into three groups.

• Hotel and guest house booking commissions. Booking.com, Expedia and similar intermediaries typically charge the hotel a percentage of each booking.
• Short-term let platform commissions. Airbnb, Vrbo and Booking.com charge holiday-let hosts a fee on each booking, sometimes split between host and guest.
• Letting and management-agent fees. Owners who use an agent to run their property pay a percentage of the booking value for marketing, guest handling and cleaning management.

The question is the same for all three. Is the levy 5% of what the guest paid, or 5% of what is left after the fee?

What the guidance says

Edinburgh's provider guide, version 2.1 (pp.5 to 7) frames the answer around the "initial transaction", the wording added to the Act in July 2026.

• Where a platform acts as an agent and the contract is between the provider and the guest, there is likely to be one transaction, and the levy applies to the value paid by the guest.
• Where the commission is charged to the provider rather than the guest, it is not part of the guest's purchase, so it does not reduce the base. The levy is still on what the guest paid. The Council's worked example uses a hotel paying an OTA £15 a night: the levy stays on the full £200 room price.
• Where a reseller buys the room and sells it on under its own contract, the levy is on the price the reseller paid the provider. The provider remains liable in every case.

The guide speaks of OTAs and "another agency" selling the accommodation. It does not separately address management-agent fees charged to owners.

VisitScotland's national guidance takes a more permissive line.

• Guidance for local authorities, chapter 10, paragraph 19: commission "may or may not be included in the accommodation portion on which the visitor levy is calculated", and the liable person must be able to evidence the approach.
• FAQs for providers, §2.3: the same wording, with an example where excluding £30 of commission from a £150 night cuts the levy from £7.50 to £6.00. It then refers providers to their local authority's guidance.
• FAQs §2.4: providers "may choose whether to include or exclude agency fees, provided their approach is applied consistently and can be clearly evidenced".

So the Council's guide points one way, and the national guidance allows either way while deferring to local guidance. Only the Act binds, and none of these documents says which prevails.

Worked example 1: an Airbnb booking

A host who is not VAT-registered takes an Airbnb booking for 4 to 7 September 2026, three nights at £150. The guest pays £450.00 for the accommodation. Airbnb deducts a 15% host fee, so the host receives £382.50.

The difference is £3.37, or 15% of the levy on this booking. After the 2% provider retention, the host pays the Council £22.05 or £18.75.

If the platform also charges the guest a fee, Edinburgh's first commission example (p.6) treats commission paid by the guest to an agent as part of the initial transaction. That points towards including it.

Worked example 2: a managed holiday let sold through Booking.com

An owner's flat is run by a management agent that charges 20% of booking value. A guest books five nights through Booking.com at £200 a night, £1,000.00 in total. Booking.com's commission is 15%, or £150.00. The agent's fee is £200.00. The owner is not VAT-registered and the stay is within the five-night cap.

Where both fees are deducted, the levy falls by 35%. The guest paid exactly the same price in every row.

The same arithmetic applies to hotels. Take a hotel with £2 million of room revenue a year, net of VAT, booked through Booking.com at 17% commission, and assume stays within the five-night cap. Levied on the room price, that revenue generates £100,000 of levy. With the £340,000 of commission deducted, it generates £83,000. That is £17,000 a year from one hotel's intermediary bookings alone.

Why this matters for Edinburgh's receipts

The financial significance extends well beyond short-term lets. Hotels, guest houses, B&Bs and serviced apartments also pay commissions to Booking.com and other booking intermediaries. Accommodation owners may additionally pay letting or management-agent fees.

If these fees can be deducted when calculating the levy, the effect on Edinburgh's receipts could be substantial. Every £10 million of eligible commission or agency fees deducted from the calculation reduces the levy generated by £500,000 before provider retention.

These are not estimates of Edinburgh's actual position, which no published figure establishes. They show the scale per £10 million of fees.

The scale therefore depends on more than the number of Airbnb bookings. It depends on how much Edinburgh accommodation is sold through intermediaries, the fees charged, and which fees qualify for deduction. The same uncertainty potentially runs across a large part of the city's accommodation economy.

The fairness problem

Two providers selling comparable accommodation at the same price could report different levy liabilities because they follow different official guidance, or adopt different treatments of their selling costs. A hotel that follows the Council's guide pays the levy on its full room rate. A competitor that follows the national guidance and deducts its Booking.com commission pays less, on the same room price.

Where the levy is passed on, guests could pay different amounts for the same underlying accommodation price. That is hard to explain to visitors, and harder to defend for a tax that is meant to apply evenly across the city.

Out of step with VAT and DAC7

The levy is not the only regime that has to deal with commission, and the others take their own approach. They serve different purposes and need not agree. But a provider who deducts commission for the levy ends up with a different figure for the same booking in each place it is reported.

• VAT. For an agent-model booking, a VAT-registered provider accounts for VAT on the full price the guest pays. The platform's commission is a separate charge to the provider, often under the reverse charge where the platform is based outside the UK. Commission is not netted off sales, and turnover for the £90,000 registration threshold is the gross figure.
• DAC7. Platforms report each host's income to HMRC as consideration net of the fees and commissions they withheld, with those fees reported separately, in quarters based on when the money was paid or credited (our DAC7 article).
• Income tax. Income is the gross booking value, with platform and agent fees claimed as an expense.

So the Airbnb booking in worked example 1 is £450 of income for tax purposes, £382.50 of consideration plus a £67.50 fee in HMRC's DAC7 data, and either £450 or £382.50 on the levy return, depending on which guidance the host follows. The timing differs too: the levy follows the quarter of check-out, DAC7 the quarter of payout. None of this is wrong in itself. But a levy figure that matches neither the tax figure nor the platform figure is harder to reconcile, and harder to explain if the Council or HMRC ever compares them. Calculating the levy on what the guest paid at least keeps it aligned with VAT and income tax.

What needs to happen

The position needs a coordinated, legally supported answer covering three things: hotel booking commissions, short-term-let platform commissions, and letting or management-agent fees. The Council and VisitScotland should publish the same answer, and it should rest on the Act's "initial transaction" wording rather than on each provider's choice.

Operators need certainty before collecting and reporting the levy. The Council needs a dependable basis for forecasting receipts and funding commitments. Until then, every quarter's returns will contain an unknown share of figures calculated on a basis the Council's own guide does not support, and correcting them later will be harder for everyone.

Our position until it is settled

• We calculate the levy on what the guest paid. The Edinburgh guide addresses agency bookings directly, it is written by the authority that collects the levy, and the national FAQs themselves refer providers to local guidance.
• Excluding commission is permitted by the national guidance, but consistency is not the same as correctness. A documented, consistent approach supports a position. It does not establish that the position is legally right. If you exclude commission, keep the platform statements and a written note of your reasoning, and be aware that the Council's examples point the other way.
• Check how each contract works. Whether a fee falls inside the initial transaction depends on the contract, not the platform's name. An agent arranges your sale and takes a fee; a reseller buys the room and sells it on. Different contracts with different platforms can legitimately lead to different treatment.
• A reseller changes the base, not the liability. The levy is then on the price the reseller paid you, and you remain responsible for remitting it (p.7; FAQs §2.5).

Other points to check before you file

These are settled or lower in value, but still catch people out.

• Your figures must exclude the levy (p.14). If £100 is your total including levy, the accommodation price is £95.24.
• Remove VAT before applying the 5%, then charge VAT on the levy if you are registered (p.4; FAQs §2.14).
• The cap is the first five consecutive nights of each booking (pp.7 to 8). A fixed cleaning fee is likely levied in full; a per-night one only for the first five nights (p.8). A genuinely optional cleaning charge is left out (p.4).
• A stay crossing two quarters goes in the quarter the guest checked out (p.13). Neither the Council nor VisitScotland says how to split a stay between months within a quarter. Our working approach, pending clarification, is the check-out month. The quarter's total levy is the same either way.
• The advance-booking exemption needs a non-refundable payment, in part or in full, made before 1 October 2025, attributable to specific dates and rooms at a stated price (p.10). A refundable deposit does not qualify.
• Submit by the end of the submission window and pay by the Council's deadline (p.13). For the first quarter that is 30 October and 13 November 2026. The national FAQs (§2.15) say payment accompanies the return; in Edinburgh, follow the Council's timetable.
• If a figure will not reconcile, trace it to the booking and platform statement. If it is still unresolved near the deadline, submit on time with your best figures, explain it in the return's additional information field, and contact visitorlevy@edinburgh.gov.uk (p.14).
• Keep records for five years from the date you submit (Act, s.28; p.15).

How we can help

STL Accounting and Finance is a specialist practice for short-term let operators, part of the STL Solutions group. Three of our plans cover the Edinburgh return.

• Levy Self-Service. Our online tool applies these rules to your bookings, records your commission treatment, flags anything that looks wrong, and gives you the monthly figures and a record pack to keep. You enter the figures on visitorlevy.scot yourself.
• Levy Submission Service. Send us your booking export each quarter. We prepare the return, file it as your agent, and send you the Council's confirmation and the amount to pay.
• Accounts. Monthly bookkeeping from whatever records you have, including platform and agent fees reconciled to each payout, Making Tax Digital updates where they apply, your year-end figures, and the levy return prepared and filed every quarter.

See the plans or request a free call back and a member of the team will phone you within one working day.

This article is general information as at 18 October 2026 and is not legal, tax or financial advice. The illustrative figures are arithmetic examples, not estimates of Edinburgh's levy receipts. Where it describes our position or working approach, that is our interpretation pending clarification, not a published rule. Where in doubt, take advice on your own position.

Sources: Visitor Levy (Scotland) Act 2024 (asp 8); Scheme for the Edinburgh Visitor Levy; City of Edinburgh Council, Edinburgh Visitor Levy Scheme: Information for accommodation providers, version 2.1 (September 2026); VisitScotland, Guidance on the visitor levy for local authorities (August 2026); VisitScotland, Visitor Levy FAQs for accommodation providers, version 2 (August 2026); visitorlevy.scot.