A TAX loophole means Scottish taxpayers are subsidising Airbnb property owners in Edinburgh by up to £2.6 million, it has been claimed.

Research published by the short-term rental website suggests hosts in the Scottish capital made £78m from letting out their properties last year.

However, many are paying nothing in council tax for basic services, such as bin collections. The Evening News says the majority – more than 1000 property owners – are declaring their short-term lets to tax officials as a business and paying nothing for local services.

Under current Scottish Government rules, any short-term let which operates for more than 140 days a year does not have to pay council tax and instead becomes liable for business rates. However, small businesses with a rateable value of £15,000 or under are given total relief from business rates.

This means the vast majority of short-term lets in the city which declare themselves as businesses pay no tax to the council whatsoever.

Airbnb said the £2.6m figure was “pure speculation while the Scottish Government said it “does not recognise the figures stated”.

Local Government, Housing and Planning Minister Kevin Stewart said: “While short-term lets can have a positive impact and help boost the tourism economy across all areas of Scotland, we know that they can also create challenges. That’s why we want to ensure short-term lets are regulated appropriately.

“We are grateful for the large number of responses we received to our recent consultation, which we will now consider carefully.

“We do not recognise the figures stated. The Scottish Government is dedicated to delivering a rates regime that is fair and sustainable. This is why we prioritise small businesses by providing a small business bonus scheme which is universally available.”