Can you afford more staff?

The travel industry exists on thin margins, and changes to the National Living Wage will be just one factor that affect how recruitment is viewed from next year. Travlaw partner Ami Naru (pictured right) said a normal hike in the National Living Wage was “between 10p and 20p”, but the Budget had increased it by 6.7%.

“That is the first whammy, and then you have the National Insurance hike. The third thing to consider is not related to the Budget but the additional workers’ rights. It’s part of employers’ concerns. There’s a whole army of day one dismissal rights that were not there before.”

She suggested this may lead to an increase in homeworkers: “It’s not a new concept in travel to have self-employed working divisions. I think these divisions will expand.”

However, Barbara Kolosinska (pictured left), managing director of C&M Travel Recruitment, gave another interpretation: “The increase to the National Living Wage will also impact a lot of SME travel agencies and independents that still pay this wage – which they shouldn’t be, because it means they can’t attract the right talent.”

She added the increase in National Insurance “will hit everybody”. “It doesn’t matter who you are – the cost of running a business will rise. This will hit everyone’s bottom line and is likely to impact the consumer. Companies will have to put their margins up and increase the costs of flights and holidays."

Are you ready for flexible working?

Among the new government’s proposals are workers’ rights from day one of employment. These proposals could ban zero-hours contracts and end "fire and rehire". Others include bereavement, paternity and parental leave and further protections from unfair dismissal.

“What I’m hearing is that day one rights will not come in until autumn 2026. It will go out to consultation. There will be more legislation, I’m sure, to protect workers,” Naru said. 

Kolosinska added there may be long-term consequences as employers count the cost. “Some companies might audit everyone’s job profiles and see what they do. It may also affect future talent, because these changes may mean travel companies don’t take on as many new employees as they wanted to. This could also have a knock-on impact on existing staff resulting in an increase to their workload.”

Kolosinska believes potential employees “really value” flexible working, but cautions: “Remember companies just have to show that they are being flexible and consider these requests – they don’t necessarily have to grant them all.”

She pointed out the earliest such plans can come into effect is autumn 2026. “I don’t think this will have any impact on recruitment short-term because these are just proposals. However, employees should be aware of what could be introduced in the future.”

Should you nurture new talent?

The news on apprenticeships looks more positive following the announcement by education secretary Bridget Phillipson that she would review the previous government’s decision to de-fund schemes.

Abta has lobbied for reinstatement of funding for Level 3 qualifications. It said: “We welcome the fact that the government has paused this decision, and we await the outcome of the review, expected by the end of the year.”

Shortly after the election, the government announced steps to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy with a £40 million investment.

HR professional Claire Steiner (pictured right) said this “could be a positive move for the sector if it gives companies more flexibility, freeing up levy funds to help businesses train and retain staff and focussing on supporting younger workers through traineeships”.

She added: “It's important for the travel industry that we have as many routes to enter the sector as possible, whether that's direct entry into the workplace, via an apprenticeship, or a university degree.”

Barrhead Travel president Jacqueline Dobson (pictured left) said it was “essential” the government tackled how the apprenticeship levy operated across the UK “in order to safeguard future talent pipelines”, adding: “Nothing changes our commitment to apprentices – we’ve already planned our intake for 2025.”

Retreat from the high street, or expand onto it?

Business rates are one significant cost of being on the high street and the current system will be redesigned in 2025. Details will be announced in the 2025 Budget, with the government promising to “permanently cut” rates. However, the industry must wait until 2026 to see the full picture.

Powers to set business rates are devolved to Wales, Scotland and Northern Ireland, but James Murray, exchequer secretary to the Treasury, said reform would benefit high streets “across the UK”.

Legislation to reform business rates was published a fortnight after the Budget. Murray warned the system “cannot be transformed overnight”. In the interim period, relief introduced in the pandemic, worth up to £110,000 per annum, will fall from 75% to 40%. The picture in Scotland will become clearer following its Budget on Wednesday (4 December).

“It is essential that we now see parity on business rates relief in Scotland to allow firms on the high street to continue investing in people and communities,” said Jacqueline Dobson, Barrhead Travel president.

Changes will affect rateable values under £500,000, funded by higher taxes on properties such as online distribution warehouses. The government “intends to give the biggest cut to properties currently paying the small business multiplier – those with a rateable value less than £51,000”.

Should you sell your business?

The run-up to the Budget at the end of October saw sellers anxiously race to close deals ahead of a much-touted increase in Capital Gains Tax effective from 30 October.

Some believed it would be brought in line with higher rate income tax levels, while similar talk of a jump to at least 30% proved unfounded. Instead, the rate rose from 20% to 24%.

Deborah Potts (pictured), director of Summit Advisory, said the increase was “nowhere near” as high as predicted – good news for anyone planning to sell up in 2025. However, Potts said business owners now faced a new deadline.

Business Asset Disposal Relief, which applies to the first £1 million of sale proceeds for eligible shareholders, rises from 10% to 14% for deals done after 6 April 2025 and to 18% from 6 April 2026. “The next push in the market is to beat the 6 April 2025 deadline, although this is not as bad as feared either,” she said.