𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Rachel Reeves is believed to be plotting a £1billion “stealth tax” on family holidays just as Labour launches a summer savings package aimed at easing the cost of living crisis. Treasury officials are understood to be drawing up plans to slap 20% VAT on the fees airports charge airlines to use runways and terminals — a move critics warn would pile extra costs onto holidaymakers already facing soaring travel bills.

The proposals, being explored by HMRC, could add almost £5 to a standard Heathrow passenger charge of around £24, with airlines expected to pass the costs directly on to customers through higher ticket prices. The tax would come on top of Air Passenger Duty, which already adds between £15 and £106 to economy-class flights depending on distance travelled. Industry figures warned the move risked making Britain one of the world’s most heavily taxed aviation markets, with one airline source branding it a “stealth tax” on families struggling to afford a summer break.

Ministers are also understood to be considering backdating the levy by up to four years — the maximum allowed under current rules — potentially landing airlines with huge retrospective bills.

At Heathrow alone, the move could saddle carriers with around £1billion in additional costs, reported The Telegraph.

The plans emerged as Ms Reeves unveiled a £300million package of temporary tax cuts and discounts designed to soften the blow of rising household costs during the summer holidays.

From June 25 until September 1, VAT on entry tickets for theme parks, zoos, museums, cinemas, theatres and soft play centres will be cut from 20% to 5%. Children’s meals will also qualify for the reduced rate.

The Government claimed the measures would save a family of four around £20 on a theme park trip, while cinema tickets and family meals would also become slightly cheaper.

Children will be given free bus travel throughout August, fuel duty will remain frozen for the rest of the year and import taxes on some basic food products will also be reduced.

Ms Reeves said the package would be funded through higher taxes on oil and gas giants including BP and Shell, which she claimed would raise “hundreds of millions of pounds a year”.

However, the aviation industry reacted furiously to the possibility of fresh taxes on air travel.

An Airlines UK spokesman warned: “The UK is already one of the most overtaxed aviation markets in the world and as the cost burden increases we risk becoming even more uncompetitive. The only people cheering a move like this would be those running rival airports overseas.”

Shadow business secretary Andrew Griffith said: “Any additional tax on aviation is a tax on doing business, a brake on exports or an attack on hard-working families. No government on the side of growth would indulge this idea.”

Industry insiders also questioned whether the proposals would even be legal, with international aviation agreements generally exempting airfares from VAT.

Heathrow Airport is understood to be seeking legal advice while consulting tax experts over the plans.

A Government spokesman insisted no decision had been taken, saying: “The Government is not considering any changes to tax rules in this area. HMRC routinely engage businesses on how existing tax rules are being applied.”

Express.co.uk has contacted HMRC for additional comment.