Changes to holiday tax are being considered as part of the Autumn Budget, to help the tourism sector, holiday lettings and airline industries.
A spokesman for the Chancellor of the Exchequer, Rishi Sunak, has reported that a consultation on aviation tax reform will take place before the budget announcement takes place, according to the Mirror.
Considerations will include increasing the number of international distance bands, potentially saving airlines tax money for short-haul international flights, as well as possible measures to change how air passenger duty is calculated, which may include for example an exception for the return leg of flights.
As air passenger duty is a tax on all passenger flights that take off from UK airports and the cost of this tax is paid by airlines but passed on to passengers, a change to the tax may lead to reduced prices for flights. Reduced flights may win potential holidaymakers over and this could help revitalised a tourism industry affected by Covid-19.
It is possible that £8bn could be generated by waiving air passenger duty, which could help offset the 97 per cent reduction in passenger numbers since March.
According to the Airport Operators Association, “more than 100,000 jobs” are at risk of being lost as a result of both the cost of flights and quarantine procedures.
The calls for a reduction in duty come alongside a call for an alternative to the 14-day quarantine system, which has also led to prospective holidaymakers waiting until the last minute before buying flights, packages and holiday lettings.
The current system of requiring a 14 day quarantine period when leaving a country which exceeds a certain threshold of cases has led to several cases where holidaymakers have been forced to leave a country on less than 24 hours notice to avoid being quarantined upon their return.
The AOA also sent an open letter to Boris Johnson, Prime Minister, in which they propose a package of support for airlines, which along with suspending air passenger duty, includes a relief of business rates, adding sector-specific fiscal support measures to help the tourism industry, funding the Civil Aviation Authority and agreeing on a funding solution to modernise airspace.
Does Airline Duty Affect Holiday Lettings?
Airline passenger duty does not on its own affect the cost of holiday lettings. However, for many holidaymakers to consider a holiday, it stands to reason that they will consider the other costs associated with travel, from flights to visas to travel insurance.
More recently, because of the Covid-19 pandemic, whether passengers will end up in a 14-day quarantine is also being considered.
With such short notice for changes to flight rules, many holidaymakers are opting to either wait until everything has settled down or pick a date and arrange everything closer to the time, with the knowledge of what islands and countries are part of the Government’s allowed list.
Any barrier to flying is a barrier to every other purchase a holidaymaker needs to make, including accommodation.
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