Is the Budget about to ground Britain’s travel industry before take off?

This is a sector that needs predictability and a tax and policy framework that reflects its real value to the economy. Tourism contributes nearly £286 billion a year to UK GDP, supports millions of jobs, and draws visitors and investment to every corner of the country.

Too often, it’s sidelined in fiscal planning, despite its proven economic value.

That’s not accidental, it reflects a longstanding political blind spot, where successive governments have undermined the travel industry’s success by treating it as a revenue tap, not a strategic priority.

Treasury decisions are often driven more by short-term fiscal necessity than by long-term thinking. And the result is a sector carrying national weight, with little national protection.

The Budget is expected to deliver two major pressures: a rise in Air Passenger Duty (APD), and the rollout of a tourist tax. Either would have a knock-on effect.

APD is already one of the highest in the world; increasing it further risks making UK routes less competitive and dampening inbound travel.

While border policy may not be a headline in this Budget, delays linked to the EU’s new entry system are adding pressure on outbound operators and is a reminder that growth depends on both domestic support and international ease.

The proposal of a tourist tax will allow local authorities the power to implement their own rates. Layering a nightly tourist tax onto VAT risks pricing out both domestic travellers and overseas visitors just as businesses are working hard to keep trips affordable and destinations attractive.

These aren’t abstract risks; they’re real pressures that business owners are working through as they grow.

Travel companies have been stabilising, investing selectively, and building back stronger after a disruptive few years. With costs still high and recovery uneven, the right decisions and good policy now will drive the sector forward, not hold it back.

Smaller operators - the guesthouses, holiday parks, independent hotels that form the backbone of domestic travel - carry a particular weight.

Many have already absorbed significant cost increases in wages, national insurance contributions, utilities, insurance and supplies, all while trying to keep prices competitive for UK families.

What’s needed is targeted relief that recognises the pressures these businesses are under.

Business rates reform continued energy support, and a clear decision to avoid new levies like tourist taxes would all make a measurable difference.

Rates reform is another area where we could see change and where it’s needed. Many high street travel agents are still facing high costs despite reduced footfall, and any relief here is welcome.

While most of the lobbying has come from the UK hospitality sector, a reduction in business rates could also offer much-needed breathing room for agents with physical stores.

It’s also not just sector-specific taxes that matter, adjustments to income tax or inheritance tax might not seem connected, but they affect how confident households feel to book. Travel is scaled back when budgets are tight.

The UK has one of the world’s most developed visitor economies.

But it also has a narrow window to retain that position.

Travel doesn’t need to be propped up, but it does need to be prioritised and a stable, fair tax environment would be a good place to start.

Zoe Powell is Director of Travel, Hospitality and Leisure at Xeinadin, specialising in finance and regulatory advice for the UK travel industry.

LBC Opinion provides a platform for diverse opinions on current affairs and matters of public interest.

The views expressed are those of the authors and do not necessarily reflect the official LBC position.

To contact us email opinion@lbc.co.uk