Millions of Brits are on course to feel the pinch with a potential hike in HMRC tax, says tax specialist Andy Wood from Tax Natives. Slated for the forthcoming Budget on October 30, the Government is “expected” to raise Air Passenger Duty, which could see holiday prices soar, especially for those jetting off to far-flung destinations.
The duty, known as APD, is charged by HMRC for flights departing UK airports and varies according to distance and class of travel. He highlighted that the UK already charges one of the steepest rates of APD globally, a factor that significantly adds to the cost of air travel.
Andy commented: “APD was already increased earlier this year, but with the Chancellor expected to target this tax again, the financial burden on travellers is likely to grow significantly. In April, we saw economy class domestic flight APD rise by 50p, short-haul overseas flights increased by £2, and long-haul flights of up to 5,500 miles saw an 11% surge, from £194 to £216.”
He further explained the ramifications: “Any additional increase in APD will directly affect flight prices, making holidays more expensive for UK travellers. Even a seemingly small increase of a few pounds can have a large impact, particularly for families booking multiple tickets or those opting for long-haul destinations. When you multiply the increase by several passengers, the extra cost becomes significant.”
Andy has highlighted that long-haul holidays are set to be the most affected, as higher rates will be applied to flights covering greater distances: “The further the destination, the larger the financial impact. Long-haul travellers could see a substantial rise in their holiday costs if the government pushes ahead with these tax hikes.”
He also pointed out the difficult timing of the potential increase: “The timing of this potential increase is particularly challenging for many. We are in the midst of a cost-of-living crisis, and further increases to APD would add to the financial strain on families looking to enjoy a break abroad. While the government has pledged not to raise major taxes like income tax or VAT, smaller taxes such as APD could become the focus, placing an additional burden on consumers.”
Andy is urging holidaymakers to book quickly to avoid the anticipated price hikes following any announcements in the Autumn Budget: “For those planning holidays in 2025 or beyond, it’s advisable to lock in prices now, as flight costs are almost certain to rise if APD is targeted again. We can only hope that the Chancellor reconsiders this move and takes into account the challenges that British holidaymakers are already facing.”