Tax bill and Middle East weigh on Heathrow despite record numbers
Heathrow’s tax bill has more than doubled in the first half of this year, weighing on profit at the airport despite it bucking the Middle East conflict to enjoy record passenger numbers.
The west London hub faced a £129m bill to HMRC in the six months to July, according to its latest update, up from £62m the year before as the government’s business rates and national insurance raids ate into the firm’s bottom line.
Profit at the airport fell by five per cent to £69m as a result, even though it shrugged off the uncertainty of the Iran war to attract a record than 40m passengers for the first time in its history.
The UK’s only hub benefited from a considerable uptick in traffic to and from the Asia Pacific and North America, which was by 7.9 per cent 1.6 per cent respectively. But it also suffered a 25 per cent fall in passenger volumes to and from the Middle East, as the protracted conflict forced carriers to cancel flights and fewer passengers booked trips to the region.
Revenue at the airport ticked up 0.3 per cent to £1.7bn despite the war, aided by the record passengers. Heathrow generates much of its revenue through so-called passenger charges, a levy that is added onto the cost of travellers’ tickets.
The airport remains the most expensive of its kind, prompting several airlines to call for its regulatory model to be overhauled ahead of the third runway expansion. Several are lobbying for the ambitious third runway expansion to be given to a rival bidder, in a move they say will help bring down costs and thus keep passenger charges down.
Thomas Woldbye said: “Our plan for the future is about much more than just building a third runway – this project is a real opportunity to provide an economic boost to every region and nation of the country.
“It will back British industry by pumping billions of pounds of private investment into our UK supply chain, revitalising the UK’s steel sector as well as creating tens of thousands of new jobs and skilled apprenticeships across the country.”
Heathrow’s higher tax bill comes despite the airport benefiting from a £900m business rates discount, after warning the government’s overhaul at last autumn’s budget would lead to higher fares for passengers. Without the transitional relief, the airport had warned it faced paying over £1.5bn in business rates over the three three years.
The hub also pointed to ministers’ national insurance crackdown as adding to its cost base, saying that the hike, which came into force in April 2025, was still feeding through into wage pressures this year.