Ring to cancel engagement on vacation (7)
I believe the answer is:
annulet
'ring' is the definition.
(annulet is a kind of ring)
'cancel engagement on vacation' is the wordplay.
'cancel' becomes 'annul' (annulling is a kind of cancelling).
'on vacation' suggests removing the centre.
'engagement' with its middle taken out is 'et'.
'annul'+'et'='ANNULET'
'to' acts as a link.
(Other definitions for annulet that I've seen before include "Small ring (heraldry)" , "Heraldic small ring" , "small charge" , "Band around a column; heraldic ring" , "Small band around a column" .)