How to Set Up a UK City Tax or Visitor Levy in RMS

How to set up a United Kingdom city tax or visitor levy in RMS as a separate tax charged on top of your VAT inclusive rate, so it calculates automatically on every reservation, reaches your online channels correctly and appears as its own line on the guest account.

Overview

A city tax, also called a visitor levy, occupancy tax, tourist tax or bed tax, is a charge collected by the accommodation provider on behalf of a local government authority, based on rules set by the authority for the area where the property operates.

In the United Kingdom, Scottish councils call it a Visitor Levy, Welsh councils can adopt the Welsh Visitor Levy, and the UK Government has confirmed that strategic authorities in England will be given powers to introduce an Overnight Visitor Levy.

Adoption is optional for each authority, and each scheme sets its own rate, calculation basis, night cap and start date.

RMS calculates and applies the charge automatically as part of the reservation and invoicing process, so your team does not need to add it manually for every booking. The levy is set up as a tax record at Setup > Accounting > Taxes and allocated to each Category.

The property's Tax Option is set to Tax Exclusive (Tax Charged Separately), so the levy is charged on top of a rate that continues to include VAT, records against its own GL Acc Code for reporting, and appears as a separate line on the guest account and Tax Invoice.

The steps below cover the generic RMS setup that every UK levy needs, what to check on your Online Travel Agent (OTA) channels and the RMS Booking Engine, and how to apply the levy to existing reservations and report on it.

Important! The setup in this article is for demonstration purposes only. Properties should confirm their obligations, rates, exemptions and start dates with their accountant and their local authority before completing tax setup in RMS.

Please Note! RMS is highly configurable. Some Terminology, User Access & Permissions, Images, Labels, and Functions used in these articles may differ from your setup. CLICK HERE to find out more.

Before you start

Before configuring a city tax or visitor levy in RMS, confirm the following details of your scheme with your local council or tax authority. Each detail maps to a setting in RMS.

Scheme detail to confirm	Where it is used in RMS
The current rate and how it is calculated: a percentage of the accommodation charge, a flat fee per night, or a flat fee per guest	Tax Types tab on the tax record
Exemptions, for example children under a certain age, long stay guests or specific accommodation types	Tax Types tab (Adult, Child and Infant amounts), Tax Only Applies To First [N] Nights on the Details tab, Category allocation, and Tax Exemption records
Night cap, for example the first 5 nights of a stay	Details tab, Tax Only Applies To First [N] Nights
The first stay date the levy applies to	Schedule tab, Effective From
Booking date boundary, where only bookings made on or after a given date are liable	Tax Exemption on earlier reservations (see After setup)
Whether VAT is charged on the levy	Details tab of the tax record (see How RMS calculates a city tax or visitor levy)
Whether the levy must be posted to a specific revenue or GL account for reporting	G/L Acc Code on the Details tab
Which channels and booking engines sell the property, and how they show the levy to the guest	Step 6 and the channel's own tax settings

Prerequisites

A Security Profile with System Administrator access, which is required to edit Accounting Options and tax setup.
A GL Acc Code for the levy, so the amounts collected can be reported separately from VAT and from accommodation revenue.
A list of every Category at the property, because the levy must be allocated to each one.
The scheme details from the table above, confirmed with the local authority.

Tip! Complete this setup in the Training Database first and check a test reservation before making the change in your live database.

How RMS calculates a city tax or visitor levy

A city tax or visitor levy in RMS is a tax record allocated to Categories, so RMS posts it automatically each time an accommodation charge is created.

With the property's Tax Option set to Tax Exclusive (Tax Charged Separately), the rate loaded in Rate Manager is the room rate including VAT, and the levy is an exclusive tax added on top of that rate. For example, with a 5% levy and a rate of 100.00, RMS posts a base rate of 100.00, a levy of 5.00 and a total of 105.00.

Percentage levies

A percentage levy is calculated on the accommodation charge for each chargeable night at the headline rate published by the authority, entered on the Tax Types tab as Tax Exclusive(%). For the Edinburgh Visitor Levy the percentage is 5.

Per person per night levies

A per person per night levy is a fixed amount charged for each guest on each night of the stay.

In RMS it is set up on the Tax Types tab as Per Person/Per Day, with separate amounts for Adults, Children and Infants, so a scheme that does not charge under 18s is configured by leaving the Child and Infant amounts at 0.00. RMS multiplies the amount by the number of guests recorded on the reservation for each night.

Leave Subtract from Rate clear so the levy is added on top of the rate rather than taken out of it.

VAT on the levy

Whether VAT is charged on the levy depends on the scheme.

Confirm with your tax advisor before setup.

Night caps and start dates

A night cap is set on the Details tab with Tax Only Applies To First [N] Nights. The cap applies within a single reservation; nights beyond the cap post a levy of 0.00.
A start date is set on the Schedule tab. A scheduled amount applies to accommodation charges created in RMS for dates on or after the Effective From date, including charges on reservations that already exist. See Schedule a tax change.

Set up the levy in RMS

Setting up a city tax or visitor levy in RMS takes seven steps, completed in order on Accounting Options, the tax record, the Categories and your online channels. Each step depends on the one before it.

Step 1 - Update your Tax Option

Step 1 sets the property's Tax Option to Tax Exclusive (Tax Charged Separately). This allows the property to apply both inclusive taxes, such as the VAT already contained in your rates, and exclusive taxes, such as the levy charged on top.

In the side menu of RMS, go to Setup > Accounting > Accounting Options.

Select the Property, if using a multi-property database.
Navigate to the VAT tab. This tab carries your property's tax label, so it reads GST/VAT or Tax on some databases.
Change the Tax Option to Tax Exclusive (Tax Charged Separately).
Select the option to hide taxes that calculate to 0.00, so that nights the levy does not apply to do not show a 0.00 levy line on guest accounts.
Select Save/Exit.

Important! Changing the Tax Option on a live property affects how every existing rate, charge and transaction is calculated. Make the change in the Training Database first, check the results in Step 7, and contact RMS Support before changing the Tax Option on your live database.

Step 2 - Create the levy tax record

Step 2 creates the tax record for the levy, sets any night cap, and assigns the record to the property or properties inside the authority's area.

In the side menu of RMS, go to Setup > Accounting > Taxes.

Select Add.
Enter a Description, for example City Visitor Levy.
Select the Tax Class, for example Standard.
Select the G/L Acc Code created for the levy.
If the scheme caps the number of chargeable nights, select Tax Only Applies To First and enter the number of Nights. Otherwise leave Tax Applies For Entire Stay selected.
Navigate to the Properties tab.
Select Add.
Select the Property the levy applies to, then select Allocate.
Select Apply/Exit.

Please Note! On a multi-property database, allocate only the properties located inside the authority's area. A property outside the area must not carry the levy.

Step 3 - Set the calculation method

Step 3 sets how RMS calculates the levy amount on the Tax Types tab of the tax record. Follow the section that matches your scheme's basis.

Percentage levy

Navigate to the Tax Types tab.
If the levy is already in force, select Tax Exclusive(%) and enter the percentage published by the authority.
If the levy starts on a future date, select Per Person and leave the value at 0.00. This holds the levy at zero until the scheduled percentage from Step 4 takes effect.
Select Save.

Per person per night levy

Navigate to the Tax Types tab.
Select Per Person/Per Day.
Select Per Day.
Enter the amount per night for Adults, Children and Infants. Enter 0.00 for any guest type the scheme does not charge.
Leave Subtract from Rate clear so the levy is added on top of the rate. Select it only if the levy is already included in your advertised price.
Select Save.

Step 4 - Schedule the start date (Optional)

Step 4 schedules the levy to start on the first stay date the scheme applies to. Complete this step only when the levy starts on a future date; if the levy is already in force, select Save/Exit on the tax record and continue to Step 5.

Navigate to the Schedule tab.
Select Add.
Set the Effective From date to the first stay date the levy applies to.
Enter the levy percentage or amount that applies from that date.
Select Save/Exit.
Select Save/Exit again to complete the tax record.

Please Note! The scheduled amount applies to accommodation charges created in RMS for dates on or after the Effective From date. Nights before that date post a levy of 0.00, which the hide option selected in Step 1 keeps off the account.

Step 5 - Allocate the levy to every Category

Step 5 allocates the levy tax to each Category, because a tax only posts to an account when it is allocated to the Category being charged. On hotel databases the menu and screen read Room Types/Room. Repeat this step for every Category at the property, including any Category that is not currently sold.

In the side menu of RMS, go to Setup > Category/Area.

Select the Property, if using a multi-property database.
Select Edit on an existing Category.
Navigate to the Accounting tab.
Select the levy in the Available list.
Select the single right arrow to move the levy to the Allocated list.
Set the Method to Calculate to Use Amount, so the levy is calculated on the accommodation charge alone.
If other taxes are allocated to the Category, set the Calculation Order using the up and down arrows to the right of the Allocated list.
Select Save/Exit
Repeat steps 2 to 8 for each remaining Category.

The column headings in the Allocated list carry your property's tax label, so they read VAT Description and Based on VAT on a VAT property.

Important! If the levy is missed on one Category, reservations for that Category will not be charged the levy. Check every Category before the start date. Keep the levy on the Category rather than on a Rate Type: a tax set on the Tax tab of a Rate Type replaces the Category tax calculation instead of adding to it, and VRBO reads tax information from the Category only.

Step 6 - Configure your channels and the RMS Booking Engine

Step 6 checks that each Online Travel Agent (OTA), channel manager and the RMS Booking Engine shows the guest the levy once and that the reservation total arriving in RMS is correct. A levy allocated to a Category posts on every reservation whatever its source, including channel and RMS Booking Engine reservations, so the levy itself needs no channel-specific setup.

The amount loaded in Rate Manager is the room rate including VAT and excluding exclusive taxes such as the levy, and RMS sends that value to your connected channels unchanged. For example, with a 5% levy and a Rate Manager rate of 100.00, the value sent to the OTA is 100.00. In the same way, the rate received on an OTA reservation is treated as the room rate including VAT and excluding the levy, and RMS adds the levy on top based on the reservation's dates and your levy rules. A rate of 100.00 received from an OTA creates a reservation with a base rate of 100.00, a levy of 5.00 and a total of 105.00.

Do not build the levy into the rates you send to channels. RMS adds it to each reservation when the booking arrives.
Check the channel's own tax settings, so the channel shows the levy to the guest as a separate charge rather than including it in the room price or leaving it out.
Confirm with each channel manager or third party booking engine that the rate it sends to RMS is the room rate excluding the levy, so the levy is not counted twice or missed.
Make a test reservation through each channel and the RMS Booking Engine and compare the totals, as described in Step 7.

Please Note! The Inc Tax and Reverse Calculate Taxes on Total Rate options in Channel Mapping control whether taxes are added to rates before they are sent to a channel and whether incoming totals are treated as inclusive. Leave them at their defaults unless RMS Support advises otherwise. See Tax Settings in Channel Mapping.

Channel	What to check
Booking.com	Taxes and charges are held on Booking.com's side, under the Property tab and VAT/Tax/Charges in the extranet. A property cannot change them itself and must ask Booking.com. Where city tax is not listed as a charge, Booking.com treats it as included in the price, so ask Booking.com to list the levy as a separate charge that is excluded from the room price. Charges set up on Booking.com that are not in the rate must be mapped in Additional Charge Mapping in RMS.
Expedia	Hotel Collect reservations arrive with the Gross Rate and Expedia Collect reservations with the Net Rate, and RMS adds the levy to whichever amount arrives. Confirm with Expedia how the levy is represented on your rate plans in Expedia Partner Central.
Airbnb	The Total Rate on an Airbnb reservation is the Nett Rate with Airbnb's commission subtracted, and RMS adds the levy to that amount. Additional fees are mapped as Sundry Charges in the Category/Area and Rate Mapping.
VRBO	VRBO pulls tax information from the Category Accounting tab, not from Rate Type tax settings, so the levy appears on VRBO once Step 5 is complete.
Channel managers and third party booking engines	Each provider sends the reservation rate in its own way. Confirm with the provider that the rate sent to RMS excludes the levy. UK properties have found that providers differ in whether they send the amount before tax or a total that already includes the levy.
RMS Booking Engine	On a Tax Exclusive property the RMS Booking Engine adds the levy to the displayed rate at the payment step, so the guest sees the room rate first and the total including the levy before paying, and the reservation total in RMS matches the amount paid.

Step 7 - Verify the setup

Step 7 confirms the levy calculates as the scheme requires before any guest is charged. In the Training Database, create a test reservation for two adults arriving on or after the start date, staying more nights than the cap, then open the reservation account.

A separate levy line appears for each chargeable night, added on top of the accommodation charge.
Each levy line matches the scheme: the percentage of the accommodation charge, or the per person amount multiplied by the guests on the reservation.
No levy line appears for nights beyond the cap.
The total is the accommodation charge plus the levy, for example 100.00 plus 5.00.
The levy appears as its own line on the Tax Invoice, worded as your local authority expects on a compliant receipt.

Repeat the test on one reservation per Category to confirm the allocation in Step 5 was completed everywhere. Then make a test booking through the RMS Booking Engine and, where the channel supports test reservations, through each connected channel, and compare the total the guest saw with the Total Rate and the levy line on the reservation in RMS.

After setup

Once the levy is configured, three further topics affect how a city tax or visitor levy behaves day to day: applying it to reservations that already exist, keeping it off reservations booked before the scheme's booking date boundary, and reporting the amounts collected to the local authority.

Applying the levy to existing reservations

Once configured, the levy applies automatically to new reservations that meet your criteria. Reservations that already existed when the tax record was created do not carry the levy until their rate is recreated.

For an individual reservation, edit the reservation, open the account and create the rate again. Recalculating the rate also applies the levy.
For many reservations, use Recalculate Future Rates from the start date.
Before recalculating, check that your rate setup does not use Dynamic Pricing, because recalculating re-prices the stay at today's rates as well as adding the levy.
Check the levy appears correctly on the guest account before the guest checks out.

Reservations booked before the levy applies

Most UK schemes apply only to bookings made on or after a booking date boundary, for stays on or after the start date. RMS schedules a tax by stay date, not by booking date, so once the levy is in place it also calculates on reservations that were booked before the boundary but stay after the start date. To keep the levy off such a reservation, set up a Tax Exemption that exempts the levy tax, then select that Tax Exemption on each affected reservation.

Reporting the levy

Two reports show the levy amounts RMS has posted, which you need when preparing a return for the local authority. Reconcile the report against your GL Acc Code before remitting payment to the authority.

The Tax Audit Report at Reports > Accounting lists every transaction in a date range with the tax applied. Select Charge and group by GL Code to isolate the levy under its own GL Acc Code.
The Reservation Daily Rate Breakdown Export at Reports > Management > Financial produces one row per night of each reservation with the Base Rate, Tax and Total Rate for that night and the date the reservation was made. Use it to separate nights inside and beyond a cap, and to identify reservations booked before a booking date boundary.

We recommend checking the authority's return format against these report columns well before the first return is due, because a return may ask for figures such as net accommodation revenue excluding both VAT and the levy that need to be derived from the export.

Common setup issues

Issue: The levy is not calculating on new reservations.
Fix: Check that the levy has been allocated on the Accounting tab of the Category used by the reservation (Step 5).
Issue: The levy does not appear on reservations that existed before the setup was completed.
Fix: The rate must be recreated for the levy line to post. Recreate the rate on the reservation account or use Recalculate Future Rates from the start date.
Issue: A Tax Invoice was already generated on the account, so the levy cannot be added.
Fix: Cancel the invoice, recreate the rate, then generate a new invoice.
Issue: The levy is charged for the whole stay instead of the capped nights.
Fix: Check that Tax Only Applies To First is selected on the Details tab with the correct number in the Nights field, rather than Tax Applies For Entire Stay.
Issue: 0.00 levy lines appear on accounts for stays before the start date or nights beyond the cap.
Fix: Select the option to hide taxes that calculate to 0.00 on the VAT tab of Accounting Options (Step 1).
Issue: A per person levy posts 0.00.
Fix: A per person levy calculates from the Adults, Children and Infants recorded on the reservation. Check the guest numbers on the reservation and the amounts entered for each guest type on the Tax Types tab.
Issue: Guests see a different total on Booking.com from the reservation total in RMS.
Fix: Check how city tax is listed under VAT/Tax/Charges on Booking.com. It must be a separate charge excluded from the room price, not included in the price and not missing.
Issue: A channel reservation arrives in RMS with the levy counted twice or missing.
Fix: The provider is sending a total that includes the levy, or an amount that is not the room rate. Ask the provider to send the room rate excluding the levy, then correct the affected reservations.
Issue: Confirmation letters sent before the levy setup changed do not show the levy correctly.
Fix: A letter shows the levy as it was configured when the letter was generated. Resend the confirmation for affected reservations after the setup is complete.
Question: Is the levy itself subject to VAT?
Answer: Rules vary by authority. Confirm with your tax advisor, then see VAT on the levy above.

Still Not Working?

If you need further help setting up a city tax or visitor levy in RMS, contact RMS Support through the Help Centre or speak with your Account Manager.

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