Air Passenger Duty on economy flights for children under 12 cut from May 2015 (under 16s from May 2016)

In the Autumn Statement, the Chancellor has announced that APD on children’s flights will be scrapped for all economy class tickets (not first class).  From 1st May 2015, APD for children under 12 will be abolished and in May 2016, APD for all children under 16 is to go. This means the Treasury will miss out on £40 million in 2015/16 and £85 million in 2017/18 and £95 million in 2019/20.  The air travel industry had called for the change on the basis that it would make an annual holiday more affordable for hard pressed families. But in fact it is most likely to benefit airlines, and those on higher incomes taking several flights a year. The families struggling the most financially might at most take one European flight per year (saving £13 per child). Those able to afford long haul trips will save £71 per child – so more savings for the better off?  It airlines, airports and tour operators really wanted to help make an annual visit abroad affordable for more families, they could stop hiking their prices during the school holidays. The annual APD tax take will now be £3.2 billion in 2014/15 and still £3.2 billion in 2016/17 (while the 2011 Autumn statement estimated it would be £3.8 billion). 
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APD on children’s economy flights to be scrapped

The Chancellor today announced that Air Passenger Duty on children’s flights is to be scrapped for all economy class tickets. From May 2015, APD for children under 12 will be abolished and in the following year, APD for all children under 16 is to go.

The air travel industry had called for the change on the basis that it would make an annual holiday more affordable for hard pressed families. But in fact it is most likely to benefit airlines, and those on higher incomes taking several flights a year.

David Cameron was recently reported as telling a meeting of Conservative MPs: “I really like this one. I have three children under 10 myself. [1]”

AEF Deputy Director Cait Hewitt said: “This change might help boost airlines’ profits, but as most flights are taken by people on higher incomes who make several foreign trips a year, it will do very little for hard pressed families. If airlines, airports and tour operators really wanted to help make an annual visit abroad affordable for more families, they could stop hiking their prices during the school holidays or invest in cheaper public transport to airports.”

The majority of people flying pay the lowest rate of air passenger duty, currently set at £13 for a return trip anywhere within 2,000 miles. There is no evidence that people are deterred from taking an annual holiday because of the cost of APD.  [There is a double charge if a return flight is taken within the UK, as both trips are taxed – rather than only the outward trip].

Aviation already gets away with significant tax exemptions. Travelling by air is comparable to driving in terms of CO2 emissions per mile, but aviation pays neither VAT nor fuel duty – a significant effective subsidy. Imposing these taxes at the same rate as for motorists would generate £10 billion for the Treasury in contrast to the £3 billion raised annually from APD. [2]

 

NOTES

  1. http://www.express.co.uk/news/uk/538912/Government-abolish-flight-ticket-tax-under-12s
  2.  See our recent blog on APD for more information http://www.aef.org.uk/2014/11/06/air-passenger-duty-what-is-it-good

 

Extract from the Pre Budget Statement

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382327/44695_Accessible.pdf

Air Passenger Duty

1.223 The government will exempt children under 12 from Air Passenger Duty on
economy tickets with effect from 1 May 2015, and will extend the exemption to
include children under 16 from 1 March 2016. This will help to reduce the cost of holidays
for families by up to £71 per child.
1.224 This announcement builds on the changes announced at Budget 2014, which reduced the cost of flying to countries over 4,000 miles from London, and froze short-haul Air Passenger Duty. Together, these changes mean that 99% of passengers will see a freeze or cut in Air Passenger Duty in 2015-16. The government believes that these tax changes should be clear and visible to consumers. The government will therefore consult on an amendment to pricing regulations which would require airlines to separate out Air Passenger Duty from their other fees and charges.
Cost £ million  2014- 0,    2015 – 40,   2016 – £80 million
This on the day that the international conference on climate change opens in Peru !
According to the Airports Commission, the cost of building a new runway at Gatwick would increase the charges per passenger by £12-28 ….  including children.
Air Passenger Duty: exempting children Tax – Fiscal impact (ie money lost to Treasury):
2014 – 15     £0
2015 – 16   – £40 million
2016 – 17   – £80
2017 – 18   – £85
2018 – 19   – £90
2019 – 20    -£95
Transport taxes
2.114 Air Passenger Duty (APD) – Autumn Statement announces an exemption from
reduced rate APD from 1 May 2015 for children under 12 and from 1 March 2016 for children under 16. (Finance Bill 2015) (3)
2.115 Air Passenger Duty transparency – The government has reviewed how to improve
tax transparency in ticket prices and will consult on an amendment to the Air Services (Pricing) Regulations to require the display of APD.
Current Receipts   (OBR forecast)
Air passenger duty
2013-14    £3 billion       (£ 2.9  from the 2011 autumn statement)
2014-15   £3.2 billion    (£3.2 from 2011 autumn statement)
2015 -16   £3.1 billion   (£3.4  from 2011 autumn statement)
2016 -17   £3.2  billion   (£3.8  from 2011 autumn statement)
2017 – 18  £3.4 billion
2018 -19  £3.6 billion
2019 – 20   £3.8 billion

Air passenger duty abolished for children under 12

3.12.2014 (BBC)

Air passenger duty (APD) for children under the age of 12 on economy travel will be abolished from May 2015, Chancellor George Osborne has said in his Autumn Statement.

From the following year, APD for children under 16 will also be abolished, he said.

Critics said the move inflicted “a fatal blow” to the tax.

The measure follows an announcement in the Budget in March to scrap two APD tax bands.

Air passenger duty is charged on all passenger flights from UK airports. The rate of tax varies according to where the passenger is going, and the class of travel.

“This will save a family of four £26 on a flight to Europe, and £142 on one to the US,” the Treasury tweeted.

The move will cost the Treasury £40m in 2015-16. The cost will jump to £80m the following year, and rise to £95m in 2019-20.

‘Early stocking filler’

Easyjet said that it would “proactively refund” passengers who have already bought tickets to fly after April 2015.

The British Air Transport Association (BATA) said the government move was “an early stocking filler for families”, but it “presents significant practical difficulties” for airlines.

“The industry has always said that changes to APD should have at least a 12-month lead in time due to advance bookings,” said BATA chief executive Nathan Stower.

Mr Stower noted proposals to devolve APD powers to Scotland, and called for the tax to be put “out of its misery”.

Mark Littlewood, director general at the Institute of Economic Affairs, said the move “not only increases tax complexity, but inflicts a fatal blow to the justification for the tax existing at all”.

http://www.bbc.co.uk/news/business-30309584


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Later comment:
Dermot King, managing director of Butlins, said: “Unfortunately, the Government’s new measures on APD (air tax) have created an anomaly whereby families who go abroad get a new tax benefit but families who stay at home do not.

“Tourism, particularly domestic tourism, can help drive growth in the UK economy but only if it remains competitive. We urge the Government to reduce Vat on UK holidays to a fair level, so that we can offset the impact of a falling Euro and reduced APD charges.”

http://www.airportwatch.org.uk/2015/01/cut-tourism-vat-campaign-wants-boost-to-uk-tourism-by-cut-in-vat-to-5-on-holidays-in-uk/


 

Earlier

Industry lobby “A Fair Tax on Flying” new campaign to try to get APD reduced for children

Another year; another Autumn Statement by the Chancellor. This year’s will be on 3rd December. And so another push by the industry lobby “A Fair Tax on Flying” to try to get the rate of tax on air travel cut. In the UK, as in most countries across the world, air travel is under-taxed. For historical reason, air travel pays no tax on jet fuel. In Europe, air travel is zero-rated for VAT. APD is the only tax paid on UK air travel, and that is at the rate of just £13 per return flight per person, for any destination under 2,000 miles from Britain. APD nowhere makes up the deficit of tax lost. The net loss to the Treasury annually may be about £9 billion. The “A Fair Tax on Flying” lobby, whose members are entirely from the aviation and travel industries, now is having a go at getting the Chancellor to cut APD for any child under 12 years old. They claim this is an unfair tax on children, and on what they try to make out is the virtual necessity of foreign holidays by air for everyone. This is a self serving campaign by the lobby, to boost its trade. They gloss over the inconvenient fact that they will raise the price of air travel during school holidays and half terms etc, and charge far, far more per passenger than merely the £13 for a European trip.

Click here to view full story….

Chancellor cuts rate of Air Passenger Duty for long haul (over 4,000 miles) flights from 1st April 2015

March 19, 2014

In the Budget 2014 the Chancellor has announced that rates of Air Passenger Duty (APD) are to be reduced for flights of over 4000 miles from London, from April 2015. Rates of APD will rise by the rate of inflation (RPI) during 2014. After 1st April 2015, distance bands for all journeys longer than 2,000 miles will all be lumped together. While the rate of APD during 2014 (from 1st April 2014) is £13 for a return trip below 2,000 miles (anywhere in Europe), and the rate for journeys of 2,000 to 4,000 miles in length is £69 – the rates from April 2015 will be £13 for the short flights, and £71 for all other distances. The rates of APD in 2015 for premium classes will be £26 and £142. Commenting on this retrograde move by the Chancellor, the Aviation Environment Foundation said it is a backward step environmentally and economically. Aviation is already massively under-taxed compared with the £10 billion that would be raised per annum if aviation wasn’t exempted from fuel taxes and VAT. APD was a means of redressing this problem but any cut means that taxes will have to be raised elsewhere to balance government spending. Long-haul flights contribute more greenhouse gases in absolute terms than shorter flights. It is therefore right that the duty is proportional to the distance flown and the associated emissions. Eliminating bands C and D breaks the link between environmental impacts and tax and breaches the principle of fairness.

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