Huge blow for holidaymakers as flights will be MORE expensive under Budget ‘stealth tax’ hike
THE cost of holidays is set to soar after Rachel Reeves confirmed a stealth tax on flights.
Millions of Brits reportedly rushed to book trips abroad in the 48 hours before today’s Budget announcement amid rumours of the rise.
And their fears were confirmed this afternoon with Air Passenger Duty (APD) going up as the Chancellor desperately tries to fill a £22billion black hole in government finances.
This will be payable on all flights heading out from UK airports.
Ms Reeves said APD will rise, adding up to £2 to the cost of an economy ticket for a short-haul flight.
She added: “I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50%.”
The “trick and treat” Halloween package included:
- A freeze to fuel duty for a 15th consecutive year in a win for The Sun’s Keep It Down campaign
- A penny off a pint by cutting draught beer duty, but raising booze taxes on other drinks
- A pay rise for millions as the minimum wage was increased by £1,400 a year
- A hike to a packet of cigarettes as smoking duties were raised
- A benefits crackdown with Ms Reeves telling jobless Brits to “get back to work”
- An increase to the state pension of £473 next year through the triple lock
- An inheritance tax raid through freezing the rates people pay
- A increase to the Carer’s Allowance to give cash to 60,000 more carers
Ms Reeves mocked Tory leader Rishi Sunak as she joked his “ears have pricked up” when she mentioned APD.
The Chancellor told the Commons: “Air passenger duty has not kept up with inflation in recent years so we are introducing an adjustment, meaning an increase of no more than £2 for an economy class short-haul flight.
“But I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50%.
“That is equivalent to £450 per passenger for a private jet to, say, California.”
Zoe Harris, chief customer officer at On the Beach, told the Metro this week: “A further increase would be a kick in the teeth to millions of Brits whose pockets are set to be punished for going away on holiday for a week.
“We’re expecting millions of Brits to try and beat the increase by booking their summer holidays in the next 48 hours.”
According to the research by the publication, 35 per cent of passengers said they are worried they won’t be able to afford a holiday if the APD rises.
Also, one in ten said they will not be able to go on holiday abroad next year as the increase will price them out.
ADP is a tax on flights departing from UK airports, raising funds for the Government and also encouraging people to consider the environmental impact of their travel choices, according to Future Connect.
Earlier this month, treasury officials demanded economic performance data from the Department for Transport about the travel industry, assessing the impact of increasing APD.
The above-inflation hikes mean plane ticket prices will collectively increase the cost of holidays by hundreds of millions.
Ryanair boss Michael O’Leary is now expected to axe hundreds of UK flights.
He said previously: “If they raise APD again on domestic flights then there will be a cut in capacity, no question.
“These routes are not particularly profitable, they barely break even. APD is a penal tax on the poor. The rich don’t care.
“In a post-Brexit environment, the UK needs to stimulate inward tourism.”
Helen Whately, transport spokesman for the Conservatives, previously said: “Any tax hike – including on family holidays – will be a political choice made by the Labour Government.
“Labour told the British people, over 50 times during the election, they would not raise their taxes which they will rightly be held to account on.”
A Treasury spokesperson previously said: “The Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22billion hole the Government has inherited.”
What is APD?
Air Passenger Duty (APD) is a tax on passengers flying out of the UK.
It relates to flights on aircraft with more than 20 passenger seats.
The levy is unique to the UK and was introduced in 1994 by the then-Chancellor Ken Clarke.
It is collected by airlines on passengers who start their journeys at UK airports.
Initially, all return journeys were exempt from APD, but as of 2001 return flights within Britain have incurred two payments.
In April 2023, the APD regime was overhauled with the former two-band system replaced with a three-tier scheme based on distance being flown and amount of carbon emitted.
Flying abroad up to 2,000 miles costs £13 in economy and £26 in business class.
For journeys up to 5,500 miles, the charges are £88 and £194, respectively, and for long-haul the levy is £92 and £202.
At today’s Budget the Chancellor also confirmed there will be “no higher taxes at the petrol pumps next year”.
But Brits will still suffer from a whopping £40bn in tax rises, including huge hikes to fag and soft drink duties.
In a blow for smokers, there will be a 10% levy rise on rollies.
And there will be a one off- increase in tobacco duty “to maintain the incentive to give up smoking“.
But in a major boost for pubs, alcoholic drinks served on draught will benefit from a 1.7% tax cut, taking a “penny off a pint in the pub”.
And in a “rabbit out of the hat” moment, millions of workers will benefit from an unfreezing of income tax thresholds in 2028.