U.S. Sales Tax Rules for UK Travel Agents

U.S. Sales Tax Rules for UK Travel Agents: What you actually need to know

At Antravia UK, we work with travel agents and DMCs across the United Kingdom who are growing fast and starting to sell more into the U.S. market. One of the first questions they ask is whether they need to deal with U.S. sales tax.

The answer depends on what you’re selling, where you’re based, and how your business is structured. The rules are different from what most UK agents are used to under HMRC VAT or TOMS. And the penalties for getting it wrong can be expensive, even if you’re based thousands of miles away.

This blog breaks down the essentials of U.S. sales tax for UK travel sellers who serve American clients or sell U.S.-based travel.

First, what Is U.S. Sales Tax?

Sales tax in the U.S. is not federal. It is state-based, and each state sets its own rules. There are over 10,000 different tax jurisdictions when you include counties and cities.

Most services sold internationally are not subject to sales tax. But the minute you sell something with a U.S. component, like a hotel night, domestic flight, car hire, or tour that takes place on U.S. soil, you may trigger sales tax.

Some states tax all travel services that involve in-state activity. Others are more lenient. Some only care if you have a physical presence in the state. Others apply “economic nexus” rules, which kick in once you hit a certain dollar or booking threshold, even if you’re abroad.

What counts as a Taxable Sale?

Sales tax in the U.S. is set by states and local jurisdictions. There are over 10,000 tax zones, each with its own rules.

Here’s when you may trigger U.S. sales tax:

• You sell a hotel, car hire, or tour that takes place inside the U.S.

• You book U.S. land components on behalf of a U.S. resident.

• You hit certain nexus thresholds (usually $100,000 in sales or 200 bookings).

If you’re only booking flights or international cruises, you may be exempt, but it’s essential to check by state.

Do You Have “Nexus” in the U.S.?

“Nexus” just means a connection strong enough for a state to require you to collect and remit sales tax.

You may have nexus if:

• You operate through a U.S. entity and sell travel involving that state.

• You use a U.S.-based fulfilment partner or have staff or contractors in that state.

• You hit an annual revenue or transaction threshold for that state (often $100,000 or 200 transactions).

Each state sets its own rules, and they do change. You don’t automatically trigger nexus by working with U.S. clients. But if you’re selling U.S. land packages, that’s a different story.

At Antravia UK, we’ve helped clients identify whether nexus exists, and if so, which specific products are taxable and how to report them correctly under FRS 102 accounting principles.

What About Hotels, Tours, and Cruise Add-Ons?

If you’re selling U.S. hotels, theme-park tickets, car hire, or land-based excursions that take place in the United States, you may need to collect and remit sales tax in the state where the service is delivered.

Let’s say you’re based in London and sell a full California road trip. If your company is booking and packaging the hotel and car directly, you could be seen as the “seller of record” and become responsible for collecting California sales tax.

But if you sell through a registered U.S. tour operator or use a platform that collects tax on your behalf, your obligation may shift. The legal and tax details depend on how you’re invoicing, who the client pays, and what your contracts say.

Are Flights and Cruises Taxable?

Generally, no. U.S. domestic flights and international airline tickets are subject to federal excise tax, which is handled by the airline or ticketing platform. As a travel advisor, you don’t need to collect this yourself.

Cruises are a bit different. If you are selling a cruise departing from a U.S. port, and you include hotel nights, transfers, or excursions, you need to review those parts separately. The cruise fare itself is usually not taxable from your end, but the land-based extras might be.

Do You need to Register for U.S. Sales Tax?

Only if you meet the threshold for nexus and are selling taxable products.

If you do need to register, it is done state by state. There is no single federal registration. Some states offer free online registration, others require local agents or additional filings. You’ll also need to file monthly, quarterly, or annual returns depending on sales volume.

We recommend reviewing this early, not after your business has scaled. Once you owe sales tax, the penalties for late registration can add up quickly, even for UK-based firms with no physical U.S. presence.

What if you use a Host Agency?

If you operate under a U.S. host agency and the host is the legal seller of record, they may be responsible for handling sales tax. However, this depends on your agreement.

In some setups, the host handles ticketing and supplier payments, which can shield you from exposure. In others, you’re operating under your own brand and making independent sales. That distinction matters.

It’s worth reviewing your host contract to confirm whether they are collecting tax and how liabilities are handled. This is something we regularly review with our UK clients who work under U.S. host networks.

Final Antravi Thought

U.S. sales tax is not something you want to ignore, but it’s also not something to panic over.

If you’re a UK travel seller, the key is understanding where your risk lies. Are you selling U.S. products? Are you using your own U.S. entity? Are you handling client funds yourself or through a host? Once you know the structure, it becomes much easier to manage.

At Antravia UK, we help travel advisors and tour operators navigate these questions clearly and calmly — no jargon, no panic, just facts.

Not sure if U.S. sales tax applies to you?
Book a one-off session with Antravia UK. We’ll review your structure and products and give you a clear picture of your exposure.

📎 Read the full U.S. guide at Antravia.com