From January 2026, the UK is bringing in new accounting rules called changes to FRS 102. These rules change how businesses record their income (revenue). The travel industry is likely to feel the impact more than most.
Here’s what you need to know — explained clearly, without the technical detail.
What’s changing?
The old accounting rules looked at when the risk or reward passed to the customer.
The new rules look at something simpler:
You must record your revenue when you actually deliver each part of what the customer paid for.
This comes from a new five‑step method that works more like international standards.
So instead of recognising income based on when you get paid or when risk transfers, you now need to look at when your actual services are provided.
How this affects travel businesses
Travel companies usually sell packages that include several different services — flights, hotels, transfers, excursions, maybe insurance. Under the new rules:
A package is no longer treated as one single sale.
Instead:
Each part of the holiday (flight, hotel, transfer, etc.) is treated as its own service, unless they are truly inseparable.
You only recognise income when that specific service has been delivered.
Example:
If a customer pays £1,200 for a holiday, you may need to split that price into:
- £400 for the flight
- £600 for the hotel
- £200 for transfers and extras
You can’t record all £1,200 as revenue when the customer books.
You’ll record it gradually, as each part of the holiday takes place.
What this means in practice
Revenue will appear later than before
Travel companies often get money months before the holiday happens.
Under the new rules, that money must usually sit on the balance sheet as a liability (money owed to the customer in services), until each part of the holiday is delivered.
This means:
- You may look less profitable early in the year.
- Revenue will be spread out more evenly across your travel season.
Discounts, refunds, and compensation must be estimated early
If you offer:
- early‑bird discounts
- refunds
- cancellations
- compensation
…you now have to estimate these upfront and factor them into your revenue.
This could reduce the amount of revenue you can record at first.
More detailed record‑keeping
The new rules require businesses to keep better track of:
- what the customer has paid for
- which services relate to which part of the holiday
- what you’ve delivered and what you haven’t
And there are new disclosure requirements about revenue and customer contracts.
This may mean:
- Upgrading your booking or finance system
- Retraining your finance team
- Spending more time on reporting
ATOL‑registered companies will feel this even more
Travel companies that need an ATOL licence already face higher reporting demands.
Because revenue will be recognised later and liabilities will appear higher for longer, this might affect:
- ATOL renewal
- balance sheet strength
- working capital planning
These changes make accurate reporting even more important.
What do travel companies need to do now?
Travel businesses should start preparing by:
- Reviewing all customer contracts
Identify the separate parts of your travel packages.
- Updating your accounting/booking systems
To split out flights, hotels, extras, etc.
- Training your finance team
They’ll need to understand the new rules and how to apply them.
- Checking the impact on KPIs and lenders
Because revenue timing changes, your profitability patterns and covenant ratios may change too.
Simple summary
Here’s the easiest way to think about it:
You can only count revenue when you’ve delivered the service — not when you get paid.
For travel companies, that means:
- More splitting of holiday packages
- More admin
- Revenue coming in later on the accounts
- More careful management of refunds, discounts, and changes
- Extra pressure for ATOL‑regulated businesses