In this week’s Enews, we look at

• Trade body calls for Prime Minister to drop tourist tax plans
• HMRC updates guidance on reduced VAT rate for summer holidays
• Recruitment of permanent staff stops falling for first time in four years

Trade body UK Hospitality has urged Prime Minister Andy Burnham to shelve plans to expand the so-called ‘tourist tax’ across the UK.

UK Hospitality has written to the Prime Minister urging him to drop the plans or face losing 33,000 jobs in the UK’s tourism sector.

First proposed under Keir Starmer’s government, the Visitor Levy would give regional mayors the power to impose a tax on tourists, chargeable on overnight accommodation.

Some of the UK’s biggest hospitality providers have opposed the levy, including Whitbread, Greene King and Butlins.

Government plans indicate that funds raised via the levy will be used to finance local infrastructure projects. It stated: ‘Local leaders know what it will take to drive growth in their areas, creating jobs and attracting investment that speak to the strengths of their region.’

However, UK Hospitality has warned that the levy will hit holidaymakers with over £1 billion in tax.

Allen Simpson, Chief Executive of UK Hospitality, said: ‘It’s clear the government is now intending to implement a nationwide holiday tax, making family holidays more expensive during a cost-of-living crisis. I am pro-devolution, but I am not in favour of an extra tax that will cost 33,000 jobs.’

Press release: UK Hospitality

HMRC has updated its guidance on the temporary reduced rate of VAT applicable to children’s meals, family attractions and tickets.

Between 25 June and 1 September 2026, the rate of VAT on children’s meals and specific attractions is reduced from 20% to 5%.

The new guidance, issued on 27 July, includes additional details on party packages, prepayments and mixed supplies.

The latest guidance also confirms that users of the flat rate scheme should continue to apply their current percentage to calculate their VAT liability, and that the temporary reduced rate doesn’t apply to margin scheme supplies under the tour operator’s margin scheme.

Ed Saltmarsh, Tax Technical Manager at the Institute of Chartered Accountants in England and Wales (ICAEW), said: ‘We highlighted the challenges facing businesses in dealing with the temporary VAT cut, from having to update materials, processes and systems at short notice to dealing with boundary issues, when it was first announced.

‘The fact that HMRC has had to update its guidance one month after the policy took effect highlights the complexity of this measure.’

Press release: ICAEW
HMRC guidance: Revenue and Customs Brief 5

Analysis carried out by the Recruitment and Employment Confederation (REC) has revealed that recruitment of permanent staff stopped falling in July for the first time in almost four years.

The Confederation’s latest survey showed that the index of permanent staff placements reached 50 - this figure separates growth from contraction. Since 2022, it had been below this level.

Commenting on the figure, Maxine Bligh, Chief Membership and Innovation Officer at the REC, said: ‘Rays of light are beginning to break through for the job market as employers revive hiring plans.

‘Remarkably, this is the first month without a decline in permanent placements since Liz Truss resigned as Prime Minister in 2022, underlining just how prolonged the downturn in permanent hiring has been.’

According to the survey, vacancies rose to 47.1, which represents the highest reading since September 2024. Part-time role vacancies also increased at their fastest pace since August 2023.

Press release: Recruitment & Employment Confederation