Holidaymakers in the United Kingdom faced a record £4.6 billion bill in air passenger duty (APD) for the financial year 2025-26, according to data released by HM Revenue and Customs (HMRC). This amount represents a 12% increase, or nearly £500 million more than the previous year, following a series of rate hikes introduced by the Labour government.
APD, often referred to as a "holiday tax," is levied per passenger on outbound flights from UK airports. The charge varies based on flight distance and travel class. In April 2026, rates were increased across all categories: economy fares on flights up to 2,000 miles—covering most European destinations—rose from £13 to £15, while premium economy was raised to £32. For routes up to 5,500 miles, such as Dubai, India, or Florida, economy fares increased from £90 to £102, with premium economy jumping to £244. Longer flights to destinations like Japan or Australia saw economy rates rise from £94 to £106 and premium economy to £253. Children under 16 traveling in economy class remain exempt from the tax.
In the first quarter of the 2026-27 financial year (April to July), the Treasury collected a record £1.6 billion from APD, £66 million more than the same period the year before, signaling a potential all-time high for this fiscal year.
Critics from the aviation and travel industries warn that these tax increases are driving up ticket prices, reducing the affordability of air travel, and harming the UK economy. Willie Walsh, former British Airways chief and current head of the International Air Transport Association, described APD as the highest global tax on air travel, amounting to approximately 20% of the average ticket price. He argued that the levy discourages foreign investment, damages export potential, and risks making UK airlines and service industries less competitive internationally. Similarly, Mark Tanzer of the ABTA travel association urged the government to reconsider further hikes to avoid placing additional strain on families and holidaymakers, citing the UK’s already high departure taxes compared to other countries.
Industry representatives also caution that further increases could undermine the growth of the UK aviation sector. Tim Alderslade, chief executive of Airlines UK, which represents several major carriers, called for caution to preserve flight affordability amid broader economic challenges.
Political response has been divided. The Conservative Party has criticized Labour for placing an additional tax burden on families, emphasizing the impact on hard-working individuals seeking affordable holidays during a cost-of-living crisis. Tory transport spokesman Richard Holden accused the government of targeting families with rising taxes that make breaks less attainable. Meanwhile, the Taxpayers’ Alliance warned that higher taxes on wealthier individuals might drive them to relocate abroad, increasing tax pressure on working people.
Labour leadership, including Prime Minister Andy Burnham, has not ruled out further tax increases on higher earners as part of a wider tax-and-spend agenda, despite concerns from some economists that such measures could hamper economic growth. The number of millionaires in the UK reportedly fell by 7% last year under the current government’s fiscal policies.
The Treasury defended the tax as a “fair contribution” toward public priorities such as addressing the cost of living, noting that plane tickets are not subject to VAT and that there is no duty on jet fuel.
The debate over APD highlights the ongoing tension between raising government revenue and maintaining the competitiveness and accessibility of UK air travel. The next Budget, due next month, will be closely watched for any decisions on whether to freeze or further adjust the levy.