Autumn Budget 2025: What It Means for Business Travel

Rachel Reeves, Chancellor of the Exchequer, delivered the UK government’s much-anticipated 2025 Autumn budget on Wednesday 26 November, setting out tax-raising measures worth £26bn to be implemented by 2029-30.

The budget announced several measures that will shape travel costs and strategies in the coming years, confirming how the budget will impact air, train and car travel, aswell as overnight stays. Here we share what the measures announced in thie year’s budget mean for business travel:

Air travel

Air Passenger Duty (APD) is an excise tax charged to adult passengers departing from airports in the United Kingdom or the Isle of Man. It is paid in addition to airport taxes and fees. Originally promoted as a “green tax” aimed at reducing carbon emissions, APD fees are broken down into destination bands as well as the class of travel.

Introduced in 1994, APD was initially set at £5 for European flights and £10 for long-haul journeys but over the years, has seen multiple increases. The Autumn Budget confirmed previously announced rises effective from 1 April 2026 and introduced further adjustments from April 2027, which will be indexed to Retail Price Inflation (RPI), with long-haul premium classes seeing the most significant increases.

What are the new Air Passenger Duty charges?

From 1 April 2026, the rates will be set at:

• Domestic: Reduced rate of £8, standard rate of £16, and higher rate of £142
• Band A: Reduced rate of £15, standard rate of £32, and higher rate of £142
• Band B: Reduced rate of £102, standard rate of £244, and higher rate of £1,097
• Band C: Reduced rate of £106, standard rate of £253, and higher rate of £1,141

From 1 April 2027, the rates will be set at:

• Domestic: Reduced rate of £8.26, standard rate of £16.52, and higher rate of £146.53
• Band A: Reduced rate of £15.49, standard rate of £33.04, and higher rate of £146.63
• Band B: Reduced rate of £105.33, standard rate of £251.95, and higher rate of £1132.76
• Band C: Reduced rate of £109.46, standard rate of £261.25, and higher rate of £1178.20

Bands and rates explained

Domestic band: Flights within the UK (England, Scotland, Wales, and Northern Ireland only).

Band A: Destinations where the capital city is up to 2,000 miles from London (includes all of Europe and parts of North Africa).

Band B: Destinations where the capital city is between 2,001 and 5,500 miles from London (includes much of the United States, parts of Africa, and the Middle East).

Band C: Destinations where the capital city is over 5,500 miles from London (ultra-long-haul destinations like Australia, New Zealand, and some parts of Asia and South America).

For each destination band, there are different rates depending on the class of travel:

Reduced rate: For the lowest class of travel with a seat pitch less than 40 inches.

Standard rate: For any other class of travel or if the seat pitch is 40 inches or more.

Higher rate: For flights on aircraft of 20 tonnes or more equipped to carry fewer than 19 passengers (e.g., private jets).

Further detail on APD rates can be found on the gov.uk website.

Accommodation and overnight stays

Visitors to English cities and regions could soon face a tourist tax under proposals outlined in the Autumn Budget, with locally elected mayors gaining new powers to boost investment and drive growth through a levy on overnight stays.

The charge is expected to be set at a modest level and would apply to all overnight visitors, regardless of nationality, including those travelling for business as well as leisure.

Similar schemes are already in place in Scotland and Wales – where charges are expected to be up to £1.30 per person per night in Wales and 5 per cent of the net accommodation cost in Scotland, capped at five nights. Comparable levies exist in cities across Spain, Italy, and some U.S. states.

A consultation with businesses and communities will run until February to determine details such as the rate and implementation. If introduced, this additional cost will need to be factored into budgets for overnight stays and business travel planning.

Train travel

Offering budget certainty for those businesses that are reliant on rail transport, regulated rail fares in England will remain frozen until at least March 2027

Chancellor Rachel Reeves has confirmed a freeze on regulated rail fares in England – the first in 30 years. Announced just days before the Autumn Budget, the freeze will remain in place until March 2027 and applies to regulated fares, including season tickets, most commuter routes, some off-peak return tickets on long-distance journeys, and flexible tickets for travel in and around major cities.

The freeze only covers services operated by train companies based in England and does not extend to Scotland or Wales. Unregulated fares, such as advance tickets, could still rise, although they typically follow the trend of regulated fares.

Car hire and road travel

The Autumn Budget introduced several measures that will significantly impact car hire and general vehicle usage. From 2026, most Private Hire Vehicle (PHV) and taxi fares will be subject to a 20% VAT charge. This change reverses a previous tax tribunal ruling that allowed some operators to use the Tour Operators’ Margin Scheme (TOMS) to pay lower VAT. The new rule applies to operators acting as “principals” or agents in their own name, but it does not affect journeys where the operator acts as a disclosed agent- where both the driver and company are clearly identified- or taxis hailed on the street.

In addition, the government confirmed plans for a new Electric Vehicle Excise Duty (eVED), which will come into effect in April 2028. Under this scheme, drivers of electric and plug-in hybrid cars will pay a mileage-based road tax alongside their existing Vehicle Excise Duty. A consultation on the implementation of eVED is currently open and will run until 18 March 2026.

The Budget also included measures to accelerate the rollout of electric vehicle charging infrastructure, supporting the transition to greener transport options.

Action for businesses

Some of the measures announced by the Government in the Autumn budget could impact the cost of travel, so it is important that businesses start reviewing travel budgets for 2026 onward and budgeting for potential increases. This means, updating expense policies, and considering strategies such as booking earlier flights.

It is more important than ever for businesses to ensure they are accounting for these factors in future travel budgets, but by proactively planning now, you can help to limit the impact of business travel costs. Talk to a member of our team if you would like to find out how we support our sports, media and entertainment clients to achieve best value for their travel budgets.