October 9th 2024.
Planning a budget-friendly holiday for next year? Well, now is the time to start booking because the cost of travel is about to take a sharp turn. The much-awaited Autumn Budget, set to be delivered on October 30, is expected to bring some tough decisions by the Chancellor of the Exchequer, Rachel Reeves. Experts predict that a tax hike on foreign holidays may be among the changes announced. While the Labour party has promised not to increase income tax, National Insurance or VAT, they have not ruled out the possibility of raising other smaller taxes, such as Air Passenger Duty (APD).
For those unfamiliar with APD, it is a tax paid by passengers flying out of UK airports and is included in the price of their plane ticket. The amount varies depending on the distance of travel, size of the aircraft, seat class, and other factors. Currently, rates range from £7 to £607 per person per journey, with a maximum of £673 set to be reached in April 2025. However, holiday specialists at On the Beach warn that further increases may be on the horizon and urge travelers to take action now to avoid any surprises.
According to Zoe Harris, the company's chief customer officer, if you're planning to book a holiday for 2025 or beyond, it is advisable to lock in the price now. "If APD is increased, the cost of flights will go up, making holidays more expensive. That's a fact," she says. Harris also recommends booking through a company that only requires a small deposit to secure the price. This way, you will be protected if the flight cost increases, and you could end up saving a significant amount, especially for long-haul flights.
The amount of APD you pay depends on the journey and aircraft you take. In recent years, there have been instances of APD hikes, with the most recent Budget seeing an 11% increase for long-haul flights of up to 5,500 miles. With the government looking to generate more revenue, experts believe that this may be one of the ways the Chancellor can achieve it. The Office for Budget Responsibility (OBR) projects that APD tax receipts will grow from £4.5 billion to £5.2 billion by 2026-27, with the aim of funding more environmentally-friendly modes of transport. However, this could put a strain on already struggling consumers, as many in the industry argue that it unfairly targets them.
"The UK's Air Passenger Duty is the highest passenger tax in the world," says Zoe. "A further increase would be a blow to millions of Brits. We are in a cost-of-living crisis, and the government's plan to punish regular Brits for taking a week-long holiday is not helping." She hopes that the Chancellor will reconsider any proposed increases and scrap them altogether.
We'll have to wait until the end of the month to see what the red briefcase holds. In the meantime, it's wise to take steps to protect your budget. Have a story to share? Get in touch by emailing us.
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