Rachel Reeves is set to introduce a £1 billion stealth tax on family holidays as part of her cost of living measures. The Labour Party’s Chancellor is considering imposing a 20% VAT on top of the fees airports charge airlines for using runways and terminals—fees that are typically passed directly to passengers.
At Heathrow Airport, this would increase the current standard charge from approximately £24 to nearly £29 per passenger. This additional cost would be applied alongside the existing Air Passenger Duty (APD), which varies from £15 to £106 per overseas economy-class flight depending on the distance.
Critics are sounding alarms over the move. An Airlines UK spokesperson stated, “The UK is already one of the most overtaxed aviation markets globally. Increasing the cost burden risks making us even more uncompetitive, benefiting only rival international airports.”
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Andrew Griffith, Conservative Party shadow business secretary, condemned the proposal, calling it “a tax on doing business, a brake on exports, and an unfair blow to hardworking families. No growth-focused government would support such a measure.”
An aviation industry insider told the Telegraph that tax officials are engaged in complex discussions to determine if additional revenue can be captured. The key uncertainty is whether the new tax will come into effect and if it will directly affect passengers.
The new tax rules are still being developed, with possible announcements expected later this year according to national media reports.
A spokesperson from HM Treasury clarified, “The Government is not currently considering any changes to tax rules in this area. HMRC regularly consults businesses to ensure existing tax regulations are properly applied.”