Budget rates move welcomed but some blast ‘smoke and mirrors’

Some senior trade representatives accused the government of “smoke and mirrors” in last week’s Budget after it emerged many high street travel agencies will face higher business rates next year despite “lower tax rates”.

Chancellor Rachel Reeves said the government is “introducing permanently lower tax rates for retail, hospitality and leisure properties” in England, worth “nearly £900 million a year”.

However, a Covid-era 40% discount on business rates will end next April and the government has a new, higher assessment of the value of buildings that is used to calculate business rates in England.

Speaking on behalf of the UK Outbound Travel Group, Advantage Travel Partnership chief executive Julia Lo Bue-Said said: “Last week’s Budget was smoke and mirrors for the retail, hospitality and leisure sectors. While the headlines promised business rates relief, in reality the revaluations could see bills rise rather than fall. 

“Combined with soaring employment costs from national insurance increases and now the minimum wage hike, our industry contacts are already saying they’ll think twice before replacing staff who leave. 

“These measures…are stealth taxes that threaten jobs and viability.”

 

More: Budget ’not as awful as expected’, Aito delegates told

Paul Waters, managing director at Premier Travel, welcomed lower business rates but added: “From our initial calculations, our business rates will still be going up from April. 

“The removal of the 40% relief and the new multiplier don’t result in any savings or net-zero impact. So, by my understanding, costs for business rates will be increasing for all retail travel agents from April.”

He estimated the chain’s 2026-27 rates will increase by approximately 39% compared with 2025-26.

“This amount is about 19% less than what the full rates would have been for 2025-26, but it still represents an additional cost,” he said.

Mark Tanzer, Abta chief executive, said: “The move to support high street businesses, including travel agencies, through a permanently lower level of business rates, is very welcome. However, Abta remains concerned about the cumulative impact of taxes and levies on travel businesses and consumers. 

“Changes to employment and business taxes, including further increases in the national living wage, especially for younger workers, will increase the cost of employment. 

“However, there were also some positive moves, including enhanced access to apprenticeships for SMEs.”

 

More: Aviation sector criticises further rises in APD from 2027

Elsewhere, the aviation sector criticised plans to increase APD in 2027, following the rise in April 2026. Alice Sorby, strategy and reform director at the British Airline Pilots’ Association (Balpa), said the rise was “bad news for passengers, especially families going on holiday, who now face increased ticket prices”.

Jacqueline Dobson, outgoing  president of the Scottish Passenger Agents’ Association and president of Barrhead Travel, said: “There was very little support directed towards businesses or the high street or the retail economy in general, so that was very disappointing.”

Others in travel were more optimistic, however. Steve Witt, Not Just Travel co-founder, said: “Following the Budget, we’ve had Black Friday and a payday weekend. Sales are up well over 40%.” 

Travel Trade Consultancy director Martin Alcock told Aito’s Overseas Conference the “not as awful as expected” Budget should lead to the reopening of “spending taps” on travel.