Chancellor Jeremy Hunt confirmed a 2p cut in the national insurance rate on those in work, meaning a reduction from 10% to 8%.
The cut in national insurance is calculated to be worth £451 a year to the average employee and £350 to those self employed and follows a similar 2p cut announced in the Chancellor’s Autumn Statement which came into force in January.
The latest reduction come into effect from April 5.
More: Travel and aviation leaders slam Budget APD increase
However, in a blow to the leisure and business travel sectors, Hunt announced “a one-off adjustment” in the rate of Air Passenger Duty (APD) “on non-economy flights”.
APD rates from April this year will not change from those planned, with APD on flights within Europe remaining at £13 in economy and £26 in premium or business class, and £7 or £14 on domestic flights.
The APD rate on medium and long-haul flights will increase by £1 in economy to £88 or £92 depending on the length of flight, and by £2 in business class to £194 or £202.
The one-off increase announced by the Chancellor in Budget will be from April 2025.
APD rates on short-haul economy flights won’t change, but the rate on a premium or business class short-haul fare, other than a UK domestic flight, will rise to £28.
The APD on long-haul economy fares in the band B tax rate (on flights of up to 5,500 miles) will rise by a further £2 to £90 and in band C (flights of more than 5,500 miles) to £94.
But the rates on premium fares will increase to £216 in band B and £224 in band C.
Band C destinations would include Buenos Aires, Bangkok and Cape Town.
In other measures, the Chancellor confirmed abolition of the furnished holiday lets scheme which grants tax relief to second home owners renting out properties to holidaymakers.
But in a move designed to boost investment by business he announced an extension of the ‘full expensing’ scheme previously introduced to apply to leased assets.
This could prove of widespread benefit to businesses in reducing tax bills, including to airlines leasing aircraft.
Hunt extended the freezes both on fuel duty and on alcohol duty, noting: “We value our hospitality industry.”
He announced the abolition of the non-domicile tax regime, one of the first measures promised by an incoming Labour government, and its replacement by a new scheme from April 2025.
The Chancellor made no reference to the contraction in the UK economy in the second half of last year.
But he noted the Office for Budget Responsibility (OBR) now forecasts the economy will grow by 0.8% this year and 1.9% next year – 0.5% higher than its forecast last autumn.
Full details of the Budget are only now being released by the Treasury.
Responding to the Chancellor’s statement, Labour leader Keir Starmer labelled the Budget “the last desperate act of a party that has failed”.