£1.5 BILLION: THE TAX ON HOLIDAYS3

Download the full report (PDF).

New research from the TaxPayers’ Alliance reveals the true cost of taxes on holidays abroad. With hard-working people saving all year round for a well-deserved break, few of us are aware of just how much of our holiday money goes straight into the Treasury’s coffers.

Most simple but important purchases made inside Britain before going on a holiday, such as clothes for adults or hair cuts for all the family, are subject to VAT, while travel insurance purchases are hit by Insurance Premium Tax and budget flights by Air Passenger Duty. As the summer holiday season draws near, new calculations by the TaxPayers’ Alliance reveal just how heavy a burden the taxman places on rest and relaxation. Click here for the full report (PDF).

Key findings:

• The total tax bill on Britons holidaying abroad is almost £1.5 billion, or over £30 for each of the 45 million holidays abroad taken by British residents each year (based on a representative basket of goods typically purchased). This is equivalent to the cost of a return flight to Europe for every holidaymaker.
• A family of four travelling to Florida this summer will face an average tax bill of over £200 on their flights and holiday purchases. That is equivalent to the cost of having to take an extra child along.

Matthew Elliott, Chief Executive of the TaxPayers’ Alliance, said:

“The credit crunch and soaring food and fuel costs are making it harder than ever for people to afford a well-deserved summer holiday abroad. Instead of hiking taxes on flying, Gordon Brown and Alistair Darling should give us all a tax break.”

Tax charged on some examples of holiday essentials:

• Economy flight to Florida: £40.00
• Budget flight to Malaga: £10.00
• Budget family travel insurance: £4.23
• £20 bottle of aftershave/perfume: £2.98
• Hair cut: £2.23
• Summer dress from Primark: £1.79

These are only some examples of the holiday purchases used in our calculations – for a complete list please see the full report (PDF).