What will the chancellor's Budget statement mean for travel?
Chancellor Rachel Reeves has laid out a "one off" Budget designed to tackle what the government claims is a black hole in the country’s finances of anywhere between £20 billion and £40 billion.
One thing confirmed was an expected increase in Air Passenger Duty. Reeves said APD "hadn’t kept up with inflation in recent years". She said the increase would be “no more than £2” on economy class short-haul fares. It means the rate on a flight to Europe will rise to £15.
However, Reeves said APD on private jet flights would increase by “up to” 50%, meaning APD of £450pp on a private jet flight from the UK to California. It is estimated changes will raise an extra £500 million £600 million a year.
One of the biggest announcements was to lower the threshold at which employers pay National Insurance from £9,100 to £5,000 to raise £25 billion, with the rate increasing from 13.8% to 15%.
However, there was good news for small businesses here. Reeves said: “Having heard representations… I am today increasing the Employment Allowance from £5,000 to £10,500. This means 865,000 employers won’t pay any National Insurance at all next year.”
In addition, for individuals, minimum wages will rise next April, with apprentices seeing the biggest jump from £6.40 to £7.55 an hour. Prior to this year, it was £5.28.
The minimum wage for over-21s, known as the National Living Wage, will rise by 6.7% from £11.44 to £12.21 from April 2025. This follows a jump from £10.42 this year.
For 18 to 20-year-olds, the minimum wage will rise from £8.60 to £10. In April this year, the rate was increased from £7.49.
The Treasury said a big hike in the minimum wage for under-21s was the first step towards a single rate for all adults “over time”.
Reeves also pledged better unfair dismissal protection and safeguards from bullying, together with improved maternity and paternity leave.
There were also changes to income tax and National Insurance thresholds. These were frozen, rather than increasing with inflation, by the previous government until 2028.
This created three million new taxpayers and put more than two million into higher rate tax bands, netting more than £20 billion. Reeves said she would unfreeze them from 2028.
For businesses, corporation tax will be capped at 25% for the duration of this parliament, and the £1 million annual investment allowance kept.
Reeves also detailed changes to business rates for retail high street businesses. She said: “For 2026/27 we intend to introduce two primary lower tax rates for retail, leisure and hospitality.”
These, she said, would be paid for by higher multiples on bigger premises.
The Treasury said the Budget “also provides £1.9 billion of support to small businesses and the high street in 2025/26 by freezing the small business multiplier and providing 40% relief on bills for retail, hospitality and leisure properties – up to a £110,000 cash cap".
On sustainability, Reeves pledged to fund 11 new green hydrogen plants, although it was not clear if these were aimed at reducing aviation emissions.
If you’re sat on your private jet and you’re a boss employing hundreds of staff, it hasn’t been your day.
A big hike in Air Passenger Duty on private jets – tax firm MHA puts the maximum at £1,141 – and another in your National Insurance employer contributions will not have improved the mood of anyone owning a big company.
Bigger businesses will share the burden – £25 billion – of the £40 billion chancellor Rachel Reeves is seeking to raise to improve health, education and other sectors.
For the majority of travel firms, though, there were some sweeteners, particularly the National Insurance allowance for SMEs and business rates reform.
Likewise, the average consumer does not seem to have been penalised in terms of how much cash is in their pocket, with those reliant on minimum wages set to receive a welcome pay rise.
Moreover, according to the independent Office for Budget Responsibility, inflation is set to stay below 3% for the foreseeable future, hopefully making last year’s 10%-plus a hazy memory.
So for the travel-buying public, it doesn’t look so bad – unless, of course, you were planning on splashing out on a private jet hire.
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Gary Noakes
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