Tourism and hospitality: What the latest tax changes mean for your business

Tourism and hospitality – what the future holds

Rising costs continue to create new challenges for businesses within the Tourism & Leisure sector. They face more upcoming changes in Government policy which provide additional complexity, including changes to business rates and VAT, and this is before any further changes coming in the Autumn Budget in October that have yet to be announced...

So, what can businesses be thinking about now to help plan ahead?

Business rates

The Retail, Hospitality and Leisure Relief Scheme ended after 31 March 2026 and has been replaced by rate multipliers to calculate your businesses rates bill.

For Retail, Hospitality and Leisure businesses the 2026/27 multipliers are as follows:

•           38.2p for qualifying properties with a rateable value below £51,000.

•           43.0p for qualifying properties with a rateable value between £51,000 and £499,999.

•           50.8p for qualifying properties with a rateable value above £500,000.

For example if your Retail, Hospitality and Leisure business has a rateable value of £60,000 would provide a multiplier of £43.0p which would provide a rates value of £25,800.

You will need to obtain the rateable value of your premises. The business rates revaluation for 2026 also took place on 1 April 2026 which can be found using the link below.

Find a business rates valuation - GOV.UK

You can also check the rateable value of similar properties and how your premises rateable value was calculated.

Further updates on rates

The Government has also announced that pubs, clubs and live music venues will receive a 15% relief on their rates bill in 2026/27 with an additional 20% relief in 2027/28.

Further details will be set out in the Budget on 28 October 2026 including which businesses will qualify for this relief.

The challenge for operators is that this feels less like a clean reset and more like a drip feed of rate cuts and targeted reliefs. Lower multipliers will help some tourism, hospitality and leisure businesses, but the real benefit depends heavily on rateable value, eligibility and the impact of the 2026 revaluation. Where rateable values have increased, a lower multiplier may only soften the rise rather than deliver a genuine saving.

In practical terms, the biggest winners are likely to be smaller qualifying premises below £500,000 rateable value and, subject to the final detail, pubs and live music venues that meet the specific criteria for additional relief. Those who may feel left behind include larger venues above the £500,000 threshold, businesses that sit just outside the qualifying definitions, and operators whose premises have seen a material uplift in rateable value. For them, the headline announcement may not translate into much day-to-day relief.

VAT

The Government previously introduced The Great British Summer Savings Scheme which commenced on 25 June and ends on 1 September 2026. This scheme cut VAT from 20% to 5% on qualifying family attractions, cinema and theatre tickets and children’s restaurant meals.  

See our previous blogs and podcasts for more guidance.

It is important that once the scheme concludes on 1 September that you revert any reductions in VAT to their original rate.

VAT on domestic electricity costs

Another area to watch is the VAT treatment of domestic electricity costs.

The Government has announced a temporary reduction in VAT on qualifying electricity supplies, cutting the rate from 5% to 0% from 1 October until the end of the financial year.

While the measure is primarily intended to help households manage rising energy costs, its scope is wider and may also benefit charities, residential accommodation providers and certain landlords. Domestic electricity users are expected to see lower bills and consumers should check that suppliers have passed on the reduction.

For organisations involved in property and accommodation, the impact will depend on how electricity costs are charged. Charities operating qualifying residential facilities, such as care homes, hospices and children's homes, may benefit from the zero rate, while landlords who separately recharge electricity to tenants could also be able to apply the reduced VAT treatment. Even where utilities are included within a rent charge and no direct VAT saving is visible to tenants, landlords may still see a reduction in irrecoverable VAT costs. Businesses and property owners should review their billing arrangements and ensure the correct VAT treatment is being applied from October 2026.

See our blog from our VAT team here VAT cut on electricity bills, who benefits? | Larking Gowen

Key dates

31 March 2026 – Retail, Hospitality and Leisure Relief Scheme ended

1 April 2026 – New business rates multipliers introduced and business rates revaluation became active

25 June 2026 – The Great British Summer Savings Scheme became active

1 September 2026 – The Great British Summer Savings Scheme ends

1 October 2026 – Temporary reduction in VAT on domestic electricity costs

28 October 2026 – The budget provides additional guidance on future rates reliefs for pubs, clubs and live music venues.

Key next steps for tourism and hospitality businesses

1. Check your current rateable value and confirm whether your premises fall within the qualifying Retail, Hospitality and Leisure categories for the new business rates multipliers.

2. Model the impact of the 2026/27 multipliers against your latest rates bill, particularly if your premises have been affected by the 2026 revaluation.

3. Review whether any business rates reliefs, transitional support or sector-specific measures could apply, especially if you operate a pub, club or live music venue.

4. Make sure your VAT systems, tills, booking platforms and invoices are updated when temporary VAT measures start or end, so the correct VAT rate is applied at the right time.

5. Review energy billing arrangements where electricity is recharged to tenants, guests or residents, and check whether any qualifying domestic or residential use could benefit from the VAT reduction.

6. Build these changes into cashflow forecasts, pricing decisions and autumn planning discussions before the Budget announcements are confirmed.

You can find lots of insights from our tourism specialists on our podcast Tourism Business Chat, which features podcasts from our Tourism Business Survey Results Seminar 2026, you can find those here – they have lots of fascinating insights and inspiration to take into your business.

Director, Jo Burton, and VAT Director, Gillian McGill, also recorded a podcast on the Great British Summer Savings Scheme, take a listen, and have a think about what benefit it has really had on your business?

If you need support with the next steps, get in touch, we would be happy to have a chat about what comes next...

Jamie Steel | Assistant Manager in our tourism, leisure and hospitality team | Based in Ipswich, Suffolk