Rachel Reeves is preparing a £1bn stealth tax on family holidays as part of her cost of living package. The Labour Party Chancellor is drawing up plans to impose VAT of 20 per cent on top of the fees that airports charge airlines to use their runways and terminals.
These fees are typically passed on to customers in full, the Telegraph has warned. At Heathrow, the measures could add almost £5 to the current standard charge of about £24, taking it to £29. The sum would be imposed on top of the Air Passenger Duty (APD), which ranges from £15 to £106 for an overseas flight on an economy-class ticket depending on the distance flown.
Industry and Political Reactions
An Airlines UK spokesman said: “The UK is already one of the most overtaxed aviation markets in the world and as the cost burden increases we risk becoming even more uncompetitive. The only people cheering a move like this would be those running rival airports overseas.”
Andrew Griffith, the Conservative Party shadow business secretary, said: “Any additional tax on aviation is a tax on doing business, a brake on exports or an attack on hard-working families. No government on the side of growth would indulge this idea.”
Technical Discussions and Potential Impact
An aviation source spoke to the Telegraph and said: “It’s a very technical conversation, with HMRC trying to work out if they can capture additional tax revenue. The question is whether it’s going to move forward and, if it does, whether it is going to hit passengers.”
The rules are currently being drawn up and could be announced later this year, according to the national broadsheet newspaper. A HM Treasury and government spokesman said: “The Government is not considering any changes to tax rules in this area. HMRC routinely engage businesses on how existing tax rules are being applied.”
