THE cost of holidays is set to soar after Rachel Reeves confirmed a stealth tax on flights.
Today’s Budget announcement confirmed that Air Passenger Duty (APD) would be going up as the Chancellor desperately tries to fill a £22billion black hole in government finances.
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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.
Ms Reeves said APD will rise, adding up to £2 to the cost of an economy ticket for a short-haul flight, such as flying with Ryanair from the UK to Spain.
This will be payable on all flights heading out from UK airports.
The “trick and treat” Halloween package included:
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.”
She continued: “But I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50 per cent.
“That is equivalent to £450 per passenger for a private jet to, say, California.”
Karen Dee, chief executive of AirportsUK, the trade association for UK airports, said the news was “disappointing”.
She said: “It was disappointing, however, that the chancellor increased air passenger duty, especially at a time when airports are investing in new security technologies, sustainable flight and airspace modernisation, as well as facing increasing burdens in other areas.
“If the Government is serious about realising its aim for the UK is to become the fastest growing economy in the G7, then it must recognise and champion the role that airports play in growth and international connectivity, and minimise the cost and regulatory burdens imposed.”
On the Beach research found 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.
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.
The Sun’s Head of Travel weighs in on the increased Air Passenger Duty
Lisa Minot, the Sun’s Head of Travel, explained what this means for holidaymakers.
THE rise in Air Passenger Duty in the Budget will mean increased fares for ALL passengers.
With the £2 increase on economy fares, you’ll pay a minimum of £15per person to the government from April 2026 if flying short haul to Europe.
The rates were already due to rise to £7 on domestic flights and £13 on short haul flights in 2025, alongside £90 to £94 for long haul flights.
From 2026, long haul rates will rise to between £102 and £106 for each flight.
While children under 16 are exempt on short haul economy routes, they’ll have to pay if sitting in premium economy and it’s a big increase..
Also, because every passenger flying to and from the UK has to pay this tax, it’s seen as a deterrent for inbound tourists who may choose to simply visit elsewhere. Foreign visitors are forecast to spend £32.5billion in the UK this year.
When Air Passenger Duty was first introduced three decades ago, it was sold as a green tax to invest in climate-friendly technology and to deter flying.
Since then, the number of us flying has exploded and ironically, the latest government report on the increases says the rise will have ‘a negligible impact on the environment’.
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.