Start with your business model

There is no single licence for running a travel agency in the UK. What you need depends on the answers to two questions:

• Will you sell other companies’ holidays and travel services as their agent, or will you put trips together and sell them in your own name?

• Will you sell flights, on their own or as part of a holiday?

Your answers decide whether you need ATOL cover, whether you count as an organiser under the Package Travel Regulations and how you account for VAT. There are three common ways in:

• An independent agency, trading under your own name with your own agreements with tour operators and suppliers.

• Homeworking, where self-employed agents work from home, usually selling under a homeworking company’s agreements and licences.

• Joining a network or consortium, such as becoming a member of an Accredited Body, which lets you trade under its ATOL, or trading as a managed branch of an existing ABTA member.

Choose a business structure

Most businesses are set up as a sole trader or a limited company. A partnership is another option:

• Sole trader. The simplest to set up and run, but you are personally responsible for all the debts of the business.

• Partnership. You and your partners personally share responsibility for the business, and a nominated partner handles the partnership’s tax returns.

• Limited company. The company is legally separate from its owners, whose liability is limited to what they have invested. It must be registered with Companies House before it starts trading, with at least one director, a registered office address in the UK (a PO Box is no longer allowed) and a registered email address.

Registering a company online with Companies House costs £100, or £124 by post, since fees rose on 1 February 2026. Since 18 November 2025, every director has had to verify their identity before a company can be registered. People with significant control must verify when the company is registered or within 14 days. Verification is free through GOV.UK One Login.

If you plan to apply for your own ATOL as a limited company, the CAA expects at least £30,000 of paid-up share capital, so factor that into your plans early.

Register with HMRC

• Sole traders must register for Self Assessment if they earn more than £1,000 in a tax year. Register by 5 October after the end of the first tax year in which you earn more than £1,000. For example, if that first year ends on 5 April 2027, register by 5 October 2027.

• Partnerships are registered by the nominated partner, and each partner registers separately. The deadline is 5 October in the business’s second tax year.

• Limited companies are usually set up for Corporation Tax when they are incorporated. You must tell HMRC within 3 months of the company becoming active, and file a Company Tax Return even if you make a loss. Register for PAYE if you employ anyone, including yourself if you are the only director.

Making Tax Digital for Income Tax has applied since 6 April 2026 to sole traders and landlords whose qualifying income was over £50,000 in the 2024 to 2025 tax year. It will apply from April 2027 if your income was over £30,000 in 2025 to 2026, and from April 2028 if it was over £20,000 in 2026 to 2027. HMRC checks your tax return each year and writes to you if you need to join.

VAT and the Tour Operators’ Margin Scheme

You must register for VAT if your taxable turnover goes over £90,000 in any rolling 12-month period, within 30 days of the end of the month in which you went over. You must also register if you expect your taxable turnover in the next 30 days alone to go over £90,000.

How VAT works for you depends on how you sell:

• As a disclosed agent, naming the supplier and earning a commission you can readily identify, you account for VAT on your commission under the normal rules. Commission for arranging zero-rated passenger transport, such as scheduled flights, is zero-rated when you are the initial intermediary rather than a sub-agent. Commission for arranging travel for a tour operator established in the UK is standard-rated.

• Buying in travel and reselling it in your own name, as a principal or an undisclosed agent, means you must use the Tour Operators’ Margin Scheme (TOMS). VAT is due only on your margin and you cannot reclaim VAT on the travel you buy in to resell. The margin is standard-rated for travel enjoyed in the UK and zero-rated for travel enjoyed outside it.

HMRC is clear that what matters is how you actually act, not what you call yourself. If you use TOMS, the VAT registration threshold is measured on your margins plus your commission and other taxable sales, not on the total value of your bookings. VAT for travel businesses is specialist territory, so an accountant who knows TOMS is worth finding early.

Protecting your customers’ money

If you sell flights. In the UK, only the airline, an ATOL holder or a business that is exempt can sell flights, and breaking that rule is a criminal offence. You do not have to hold your own ATOL to sell flight-inclusive holidays. You can sell them as an agent for an ATOL holder under a written agency agreement, or as a member of an Accredited Body. Holding your own Standard or Small Business ATOL means applying to the Civil Aviation Authority, passing its financial tests and providing a bond. From 1 April 2026 a Small Business ATOL, for up to 500 passengers and £1 million of licensable revenue, costs £1,538 to apply for, and every ATOL holder pays a £2.50 ATOL Protection Contribution for each passenger. Our ATOL guide covers each route.

If you put packages together. If you combine travel services, such as a hotel and car hire or a flight and a hotel, and sell them as a package, you are the organiser under the Package Travel Regulations 2018. You are responsible for every part of the package, you must give travellers set information before they book and you must protect their money against your own insolvency: through ATOL for packages with flights, and through a bond, insurance or a trust account for the rest. Some sales that are linked travel arrangements today will count as packages from 6 April 2027. Our Package Travel Regulations guide explains what this involves.

ABTA and IATA

ABTA is the UK’s largest travel trade association, representing travel agents and tour operators. Membership is not a legal requirement. If you join, you agree to follow ABTA’s Code of Conduct, which includes showing the ABTA logo and your ABTA number in your advertising, having written agency agreements and responding to complaints within set times. ABTA assesses applicants’ finances and tells them during the application whether financial protection is a condition of membership. A business that does not meet the criteria may be able to trade as a managed branch of an existing member. ABTA does not publish its fees, so ask it directly.

IATA is the airlines’ trade association. Travel agents cannot become IATA members, but they can be IATA accredited. Accreditation lets an agent sell and issue tickets for the airlines that give it ticketing authority, and settle payments through IATA’s Billing and Settlement Plan (BSP). It is not required to sell flights.

Data protection

Most businesses that handle personal information must pay a data protection fee each year. Since 30 September 2026 it has been paid to the Information Commission, which took over from the Information Commissioner’s Office. The regulator is still known as the ICO, which now stands for the Information Commission’s Office. A travel business that holds customers’ booking details is unlikely to be exempt, and the regulator has a self-assessment to check. The fees are:

• £52 a year for organisations with a turnover of up to £632,000 or no more than 10 staff

• £78 for those with a turnover of up to £36 million or no more than 250 staff

• £3,763 for everyone else

There is £5 off if you pay by direct debit. Paying the fee does not replace complying with data protection law, so you also need a privacy notice and secure handling of your customers’ data.

Insurance

Employers’ liability insurance is a legal requirement as soon as you employ anyone. It must cover you for at least £5 million and come from an authorised insurer, and you can be fined £2,500 for every day you are not properly insured. There are limited exemptions, such as a company whose only employee is its owner holding at least half of its shares.

Other cover, such as public liability, professional indemnity and cyber insurance, is not a legal requirement, but ABTA requires members who act as principals or organisers to hold liability insurance. Insurance used to protect package customers’ money under the Package Travel Regulations is a separate product.

Selling online

• Prices. Since 6 April 2025, under the Digital Markets, Competition and Consumers Act 2024, the headline price you show must include any fees the customer has to pay, so adding compulsory charges at the end of the booking process is not allowed.

• Cancellation rights. The 14-day cancellation right that applies to many online purchases does not cover package travel or passenger transport. Nor does it cover accommodation, car hire and leisure services booked for specific dates. Your own booking conditions need to set out what happens if a customer cancels.

• Card payments. Any business that takes card payments must meet the card industry’s PCI DSS security standard. It is managed through your payment provider, and small businesses usually confirm compliance with a self-assessment questionnaire. Using a payment provider that handles the card details for you keeps the work to a minimum.

Your launch checklist

1. Decide your model: agent, organiser or both, and whether you will sell flights.

2. Choose your business structure and register it.

3. Register with HMRC, and check VAT and TOMS with an accountant who knows travel.

4. Settle how you will sell flights under the ATOL rules and arrange financial protection for any packages.

5. Pay the data protection fee and write your privacy notice.

6. Put employers’ liability and any other insurance in place.

7. Agree terms with the tour operators and suppliers you will sell.

8. Set up your website, booking technology and payments.