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Tax Hikes add Hundreds of Pounds to Holiday Costs

According to research by the TaxPayers’ Alliance, families are paying hundreds of pounds extra for their holiday compared to previous years, and all because of tax hikes.

Despite very small inflation figures, the cost of travelling abroad has risen substantially in recent years, thanks to increases in VAT, Insurance Premium Tax and Air Passenger Duty Tax. For example, seven years ago the average tax bill of a family travelling to the US was around £198 compared to roughly £384 in 2015.

The research found that holidaymakers will pay nearly £2.4 billion to travel this year, which averages out to around £62 per person – a substantial figure, especially when you consider low income families who save all year to afford their annual trip.

The TaxPayers’ Alliance has been compiling data since 2008, and have found that holiday taxes have increased by over £900 million. This was partially down to the VAT increase in 2011, which increased the tax rate from 17.5% to 20%, and affected everything from Insurance Premium Tax on travel insurance to the cost of suntan lotion and summer clothing.

However, the biggest reason for this price increase has been Air Passenger Duty Tax (APDT), which is now the second highest in the world. APDT has increased from £5 to fly to Europe and £10 to fly World Wide in 1994 to £26 for journeys under 2,000 miles, and £146 for longer journeys.

Unfortunately there is no way to avoid paying tax on your holiday, so it is important that you budget accurately, and shop around for the best deals on flights, accommodation and holiday essentials.

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