If you want a bargain break next year, now’s the time to book it, as the price of travel could be about to sharply rise.
The Autumn Budget is due to be delivered on October 30, and experts are predicting a tax hike affecting foreign holidays could be among the ‘difficult decisions’ announced by Chancellor of the Exchequer, Rachel Reeves.
Although Labour has promised not to increase income tax, National Insurance (NI) or VAT,it has refused to rule out raising a slew of smaller taxes, including Air Passenger Duty (APD).
APD is paid by passengers flying out of UK airports as part of their plane ticket price, and varies depending on the distance you’re travelling. Rates are also impacted by the size of the aircraft you’re on, your seat pitch, and whether you’re booked to fly economy, business or first class.
Duties – which are updated each year – currently range from £7 to £607 per person per journey, with the top end figure set to go up to £673 in April 2025.
According to holiday specialists at On the Beach however, further rises at the end of the month are a likely prospect – and you need to act now to ensure you don’t get stung.
Zoe Harris, the company’s chief customer officer, comments: ‘If you’re thinking about booking your 2025 holiday or any future holiday, our advice is to lock it in now.
‘If APD is increased, the price of flights will go up, and holidays will be more expensive; that’s a fact.’
She advises Brits to secure their price ASAP, ideally through a company that only requires a small deposit.
That way, you’re protected if the cost of flights goes up, and could end up saving ‘a fair amount’ – especially if you’re going long haul.
An APD jump certainly wouldn’t be unprecedented, with the most recent Budget seeing fees for long-haul flights of up to 5,500 miles rising by 11%, from £194 to £216.
And with the government tightening its belt, it may well be on the cards, as accountant RSM calls this ‘one of the more substantial tax levers’ open to the Chancellor in order to raise revenue.
The OBR forecasts that APD tax receipts will grow from £4.5billion this fiscal year to £5.2billion in 2026-27 – money which could be used to fund more environmentally-friendly modes of transport. Yet many in the industry argue it would unfairly target already cash-strapped consumers.
‘The UK’s Air Passenger Duty is the highest passenger tax levied anywhere in the world,’ says Zoe.
‘A further increase would be a kick in the teeth to millions of Brits. We’re in a cost-of-living crisis and the government want to punish normal Brits for going away on holiday for a week.
‘I’m hoping that the Chancellor sees sense and ensures any proposed increases are scrapped.’
We won’t know for sure until the red briefcase makes its appearance at the end of the month. In the meantime though, it’s worth doing what you can to protect your own budget.
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