British Holiday tax revenue soars to 2bn a year

British holidaymakers are being taxed to the tune of £2 billion each year, up from £500 million in 2008, new research has suggested.

The TaxPayers’ Alliance argues that a combination of Air Passenger Duty (APD), VAT on pre-holiday shopping, and holiday insurance tax, is imposing an ever-increasing financial burden on cash-strapped families.

The figure of £2 billion equates to £56 per person for every overseas holiday taken, but it is those heading beyond Europe that are being hit hardest, according to the study. While a family of six heading to Spain must pay around £187 in various taxes before they’ve left the country, a family of four visiting Florida will need to pay at least £350, while a couple visiting Australia will be taxed around £254. Those figures will be significantly higher for those travelling in premium economy, business or first-class cabins, when the rate of APD is doubled.

Britons already pay more in APD than any other nationality, and the most recent rise – in April – was the fifth in as many years. The rate paid is calculated by measuring the distance from London to the final destination’s capital city, which means that those visiting Los Angeles, for example, pay less than those flying to the Caribbean, even though LA is farther afield. A family of four flying to Europe contributes £52 in APD each time it flies; those flying to North America pay £268; those visiting the Caribbean or India pay £332, while a family going to Australia or Argentina must contribute £376.

VAT is levied on most goods and services at 20 per cent. Relevant to holiday spending, only books and children's clothes are VAT exempt.

“People work hard all year to make ends meet, despite high taxes and rising prices,” said Matthew Sinclair, chief executive of the TaxPayers’ Alliance. “They look forward to a holiday as a blessed relief but sadly the tax man is waiting even when they try to take a well-earned break.

“Britain’s exceptionally high taxes on flights in particular make holidays much more expensive, as well as making it harder for Britain to compete as a destination for tourists and business investment. The Government should cut Air Passenger Duty and make flying more affordable.”

Tax on a holiday to Spain – family of six (2012 figures)

APD - £78
VAT on pre-holiday shopping - £68
Holiday Insurance Premium Tax - £42

Tax on a holiday to Australia – for a couple (2012 figures)

APD - £184
VAT - £56
Insurance tax - £14

Tax on a holiday to Florida – family of four (2012 figures)

APD - £260
VAT - £62
Insurance tax - £28

Related Tags: