Holiday amended at our cost due to COVID!

Ljk900

Hello all,
We currently have a holiday booked to go to Dubai in August 2020, 2 adults, 2 children through a local abta and atol travel agent. 

They have phoned today to tell us that the night flight we booked is no longer available and the options were to take the 1405 flight either earlier in the day we were due to travel on or the following day. 

The earlier flight would get us there during the night and we would need to pay for an extra night in a hotel, but not the hotel we have booked for the holiday as there is no availability! They suggested paying for a hotel nearby for an extra £125 in total or booking an airport hotel then travelling onto our booked hotel when we wake up. 

The alternative is to shorten the duration of our holiday and go on the 1405 flight the next day, meaning we would lose a full day in resort, which is the exact reason we didn’t book that flight to begin with!
The other option they have given us is a non refundable credit note if we wish to cancel. 

Can they legally refuse us a refund based on a schedule change beyond our control? 

Also, where do I stand if I opt for the flight on the next day in terms of losing a day in resort? We’re not losing a full night in the hotel but clearly we would be losing out on a day in resort. 

I would appreciate your thoughts on the matter. 

Thank you in advance. 

Life__Goes__On

What does you ATOL cert say on the  bottom right  package single contract or package multi contract?