PASC UK Budget Update for Reliance Retreats Owners

Budget, Business Rates, EPCs, Tourism Tax & General Sector Risks

1. The Budget – What It Means for Short-Stay Accommodation

A simple summary of the Budget could be: Tax rises are coming, and costs for accommodation providers will increase.

We cover the key points for Reliance Retreats below.

2. Business Rates – Major Changes Ahead

Rateable Values (RV) Up Across the Board

  • England average RV increase: 23%

  • Wales average RV increase: 24%

These increases mean:

  • Many more owners will lose eligibility for Small Business Rates Relief (SBRR).

  • Some who previously paid nothing will now face substantial bills.

Loss of the 40% Hospitality Discount

This Covid-era support ends in April 2026.

When it disappears, the combined effect of:

  • Higher RVs

  • Loss of the 40% discount

  • And higher base multipliers

…means rates bills will rise significantly.

New Multiplier + Transitional Relief

The Government has introduced:

  • A reduced multiplier for hospitality (helps a little)

  • Transitional Relief (just announced)

Transitional Relief will:

  • Limit increases in year one

  • Then raise your bill every year for 3–4 years

  • Until the full increase—around 57% above today’s levels—takes effect

Important: The relief helps soften the blow, but it doesn’t remove it.

Why the Confusion?

Details were only released yesterday, including examples from Treasury.

Many owners have misunderstood the impact, which is no surprise—the system is extremely complex.

What PASC UK Is Doing

To support the sector (as we did with Fire Regulations):

A Note About the Valuation Office

The VOA doesn’t inspect every property.

It uses samples, meaning:

  • Some RVs will be too high

  • Others too low

We advise not rushing to challenge your RV until you have seen one of our webinars.

3. Tourism Tax – Now Officially on the Table

What Has Happened

Despite recent denials, Government has:

  • Announced plans to allow Mayors to introduce a Tourism Tax on overnight stays.

  • Launched a formal consultation (closing 18 Feb 2026).

This has been in development longer than suggested.

Why It Matters

Tourism taxes are almost always:

  • Bed taxes (paid only by overnight guests)

  • Applied regardless of visitor type—tourists, workers, families

  • Absorbed by businesses because dynamic pricing limits our ability to add the cost on top

Other countries with tourism taxes usually:

  • Have much lower VAT

  • Apply taxes only in certain cities, not entire nations

The UK risks becoming one of the most expensive destinations in Europe.

Worrying Detail in Government Proposal

Mayors could set higher taxes specifically for short-term lets, due to perceived housing impact.

This section is particularly concerning:

Higher rates could be applied to entire-home holiday rentals to “balance local housing demand.”

This creates a risk that self-catering gets singled out.

What PASC UK Is Doing

  • Preparing detailed guidance on how to respond

  • Meeting MPs and Ministers

  • Ensuring operators’ voices are heard throughout the long legislative process ahead

4. Political Update – Heavy Lobbying on EPCs

EPC requirements remain one of the biggest concerns in our sector.

Over the last week, PASC UK has:

  • Met multiple MPs from different parties

  • Secured commitments for Parliamentary Questions

  • Arranged Constituency meetings for members

  • Reinforced the position that dragging holiday lets into EPC rules is unworkable

MPs also recognised the huge business rate increases, and more political pressure is expected.

5. Budget 2025 – Additional Financial Pressures

Income Tax on Property Income (From April 2027)

Because FHL allowances end in April 2025, we will all be taxed like standard landlords.

From 2027:

  • Basic rate property income: 22%

  • Higher rate: 42%

  • Additional: 45%

Interest relief is restricted to basic-rate reductions, increasing modestly to match the new 22% base rate.

Limited companies are not affected—but dividends extracted are:

Dividend Tax Increase (From April 2026)

  • Basic rate: 10.75% (up from 8.75%)

  • Higher rate: 35.75%

  • Additional rate: unchanged

6. Pension Changes (From 2029)

Salary-sacrifice pension contributions above £2,000/year will attract:

  • Employer NICs: 15%

  • Employee NICs: 6%

This weakens a valuable tool used by many rural and family businesses.

In Summary

Business Rates

  • RVs up 23–24%

  • 40% discount ends April 2026

  • New multiplier helps a bit

  • Transitional Relief spreads increases but doesn’t cancel them

  • Expect around 57% higher bills within 3–4 years

Tourism Tax

  • Now officially proposed

  • Mayors will have power to introduce it

  • Higher rate may apply to short-term lets

  • Consultation open until Feb 2026

Taxes on Income

  • Property income tax up 2% from 2027

  • Dividend tax up 2% from 2026

  • Pension NIC changes from 2029

PASC UK Role

  • Lobbying hard on EPCs, Business Rates and Tourism Tax

  • Providing free resources

  • Clear guidance, webinars, and direct member support