Families who fly abroad for a well-earned break this summer are having to cough up a stealth “holiday tax” of up to £281, a report reveals today.
The report lays bare the impact of taxes including air passenger duty charged by the UK Government, which is the highest in the developed world.
Campaigners said the taxman was chasing travellers “all the way to the departure gate” with the bill rising by more than £900m since 2008 to £2.4bn.
The report, by the Taxpayers’ Alliance, said a typical foreign holiday carries a tax bill, including air passenger duty (APD), VAT and insurance premium tax, of £61.
APD is charged according to the distance of the flight and the class of the ticket. A family of four will pay £161 in tax, increasing to £281 to fly to Florida.
Hull-based travel agent Andrew Earle said: “It’s not uniform: People flying as far as Australia pay £194 in APD, while Australia charges £32. Greece doesn’t charge anything, China charges £12. The whole industry is built on add-ons - you can fly to Dubai with Royal Brunei for £21, but when you add taxes and fees it’s £282 - and £70 goes to the UK Government because you are flying beyond 2000 miles. What we have to recognise is that a lot of foreign people who come here and also pay APD. It is not like road tax where people can come over use the roads and disappear again.”
The research looks at typical goods bought by holidaymakers, including sun cream, sunglasses, and flipflops, on which 20 per cent VAT is paid. It puts the total VAT bill at £1.8bn, while insurance premium tax, a tax on general insurance premiums, raked in another £73m.
The Scottish Government is aiming to reduce APD by 50 per cent between 2018 and 2021. TA chief executive Jonathan Isaby said: “Not only is APD too high, it hits those on the lowest incomes the hardest, making it more difficult for hard-working people to get a well deserved break. Politicians in Scotland understand the benefits of scrapping APD and it is about time politicians in Westminster did too.”
Tim Alderslade, chief executive of the British Air Transport Association, said the tax bill was an anomaly in a post-Brexit world, adding: “APD is the highest levy of its kind in Europe by a long way and the Treasury should be upfront about why it is prepared to see families in this country pay substantially more to take a well-earned break than their counterparts in France or Germany.”
A Treasury spokesman said: “We’ve made it cheaper to fly through freezing APD for most passengers since 2012, exempting children and reducing the number of bands, meaning it’s now lower for many more long-haul destinations.”