October 28th 2024.
As the government prepares to announce its annual Budget on Wednesday, millions of holidaymakers in Britain are anxiously waiting to see if their plans for a summer getaway will be affected. Rumors have been circulating that the Air Passenger Duty (APD), also known as the "holiday tax", may be increased, prompting many travelers to rush and book their flights within the next 48 hours.
The APD is a tax paid by every passenger departing from a UK airport to any destination, whether domestic or abroad. It is expected that the increase in APD will help the government fill a £22 million deficit, but the exact details of the measure have been kept under wraps by Chancellor Rachel Reeves.
This has caused concern among British passengers, with many fearing that their holiday plans will become more expensive if the APD is raised. A recent study by package holiday specialist On the Beach revealed that more than a third of British passengers are planning to book their flights in the next two days in order to beat the potential tax hike.
Zoe Harris, chief customer officer at On the Beach, expressed her concerns about the possible increase, stating that it would result in higher flight prices and make holidays more expensive for millions of Brits. She also predicted that there will be a surge in bookings within the next 48 hours as people try to avoid the potential tax hike.
The uncertainty surrounding the APD increase has also caused worry for many working individuals in the UK. With the government's pledge not to raise income tax, VAT, or national insurance for the next five years, there is speculation as to who will be affected by the APD hike. Prime Minister Keir Starmer's recent statement on who is considered a "working person" has caused controversy, with some questioning if those who receive income from assets such as shares and property will be exempt from the increase.
Education Secretary Bridget Phillipson, who was questioned about the potential tax hike, reassured working individuals that they will not see higher taxes on their payslips. However, the uncertainty still remains as to which flights and passengers will be affected by the increase.
The APD is currently £7 for domestic flights and £13 for short-haul flights, with longer flights and business class seats costing more. It was last increased in April under the Conservative government, with domestic economy class flights seeing a 50p rise and long-haul flights seeing an 11% increase.
Tax experts have predicted that the additional money collected from the APD increase may be used to promote more environmentally friendly forms of transportation, such as train journeys. However, some airports, such as those in the Scottish Highlands and Islands region and long-haul flights from Northern Ireland, are exempt from the duty.
If the APD is increased on all other flights, it is expected that these exempt airports, such as Inverness, will see a rise in passenger numbers next year. This has caused concern for airlines, with Ryanair chief Michael O'Leary threatening to cut hundreds of UK flights if the APD is raised again. He believes that the tax unfairly affects lower-income individuals and discourages tourism in the UK.
As the nation eagerly awaits the government's Budget announcement, the fate of the APD remains uncertain. For now, travelers can only wait and see if their holiday plans will become more expensive in the coming year.
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