Edinburgh has fired the starting gun on the most ambitious experiment in tourism-tax democracy yet seen in the United Kingdom, with councillors agreeing this week to hand £2 million of Visitor Levy income directly to residents to spend on their own neighbourhoods.
Under the new Participatory Budgeting (PB) programme, the first of its scale in the UK, each of the capital’s 17 electoral wards will share £1.7 million over three years, with locals deciding through an online voting portal which community projects deserve a slice of the pot. A further £300,000 has been earmarked to administer the scheme, including staff, promotion and engagement.
The move marks a significant moment for the corporate hospitality sector. Edinburgh’s 5% accommodation levy, due to take effect on stays from 24 July 2026 and projected to raise as much as £50 million a year, is the first tourist tax of its kind in the UK, made possible by the Visitor Levy (Scotland) Act 2024. With the Chancellor reportedly weighing a nationwide hotel tax and London’s Mayor floating his own version for the capital, the way Edinburgh chooses to recycle its levy income will be watched closely by every finance director with a UK travel programme to balance.
A pilot, then full rollout
Councillors agreed that the first year of the PB scheme will run as a pilot. Each of the 17 wards will be allocated £20,000 in 2026/27 to road-test the process, before the remaining funds are released for two-year community projects spanning 2027/28 and 2028/29. The split between wards will be weighted by population and local deprivation, so more disadvantaged communities receive a larger share.
The cycle itself will run in three stages. Residents and community groups first generate ideas about how the money should be spent, drawing on local plans where they exist. Charities and community organisations then submit project proposals in response to those priorities. Finally, residents vote, strictly within their own ward, on which proposals are funded, with successful schemes delivered by external organisations.
Who pays, who benefits
Under the Visitor Levy (Scotland) Act 2024, the money raised must be reinvested in facilities and services “substantially used” by both business and leisure visitors. The City of Edinburgh Council has been clear, however, that participatory budgeting can also benefit residents, workers and students.
That nuance matters for business travel. Edinburgh is one of the UK’s most heavily booked corporate destinations outside London, with overnight stays driven by financial services, life sciences, government and a relentless events calendar. The Travel Managers’ Institute and other industry bodies have already called for business travel to be exempted from any future UK overnight visitor levy, arguing that corporate trips are non-discretionary and should not be treated as tourism. In Edinburgh, no such exemption exists: a five-night midweek stay in a £250-a-night hotel will add £62.50 to the bill before VAT.
For travel buyers, that makes transparency over how the cash is spent more than a public-relations point. The £2m PB pot sits within a much wider £90 million-plus package of transformative funding over the next three years, intended to “sustain and enhance Edinburgh’s reputation as one of the most beautiful and enjoyable destinations in the world”.
‘The first to be delivered across the whole city’
Culture and Communities Convener Councillor Margaret Graham said some Edinburgh communities had already benefitted from smaller PB programmes, but the new scheme was the first to be delivered citywide.
“We’ve specifically designed this programme to complement existing schemes, and we’re proud that residents in every ward across the city will soon benefit from an equal share of some of the funds provided by the Visitor Levy,” she said. “This means visitors to Edinburgh are contributing towards local projects that benefit us all in the places we live, work and visit ourselves.”
Cllr Graham added that the trial approach would allow officers to “closely monitor how well the scheme runs and make improvements for future years”, with engagement with community groups continuing throughout.
What it means for travel buyers
For corporate travel managers, three points stand out. First, the levy is now locked in: bookings made on or after 1 October 2025 for stays from 24 July 2026 will attract the 5% charge, capped at the first five nights. Second, the council’s decision to ring-fence a portion of the income for residents, and to publish ward-by-ward spending decisions, sets a transparency benchmark that other cities considering a similar tax will struggle to match. Third, the PB process gives industry, hotels and DMCs a direct route to shape how their guests’ contributions are spent, provided they engage with community partners early.
Edinburgh’s Visitor Levy scheme was formally agreed in January 2025. With the city now poised to become the first in Britain to recycle tourism tax revenue through a citywide resident vote, the eyes of the global meetings and events industry, and Whitehall, will be firmly on the capital.