Autumn Budget: short haul APD unchanged. Slight rises for long haul from April 2018, especially premium classes + private jets
APD since 1st April 2017 for standard class tickets to destinations under 2,000 miles away is just £13. It will stay at £13 for any return flight (adults over the age of 18 only) of under 2,000 miles, (ie. all Europe etc) for the foreseeable future. The rate of APD for trips under 2,000 miles now is £26 for premium classes, and £78 for private jet. These rates for short haul trips will all remain unchanged. For almost four in five air passengers, APD will have increased by just £3 between 1997 and 2020 – a period of 23 years. There will be very slight increases in APD, after 1st April 2018, for trips of over 2,000 miles. The increase for standard class will go from £75 now to £78. The rate for premium class tickets will go from £150 now to £156 from April 2018, up to £172 from April 2019. The APD for business jets, for trips over 2,000 miles, will go from £450 now, to £468 from April 2018 and to £515 from April 2019. So while Philip Hammond’s Spring Statement on 7th March 2017 said: “Air Passenger Duty for 2018-19 will be uprated in line with RPI” there has been no change on flights to Europe. There are instead to be rises of about 10% in the APD for premium and private jet flights over 2,000 miles after April 2019. Overall the amount of APD expected to be raised by the Treasury are slightly higher than earlier estimates, with the amount being 3.3 billion in 2017-18; 3.5 bn in 2018-19; 3.6 bn in 2019-20; 3.8 bn in 2020-21;3.9 bn in 2021-22; and 4.0 bn in 2022-23.
|Bands||Reduced rate||Premium, first class etc rate|
|(approximate distance in miles from London)||(ie. standard lowest class of travel)||(other than the lowest class of travel)||Higher rate – private jet|
|Band A||From 1 April 2017||From 1 April 2017||From 1 April 2017|
|(0 – 2,000 miles)||£13||£26||£78|
|From 1 April 2018||From 1 April 2018||From 1 April 2018|
|From 1 April 2019||From 1 April 2019||From 1 April 2019|
|Band B||From 1 April 2017||From 1 April 2017||From 1 April 2017|
|(over 2,000 miles)||£75||£150||£450|
|From 1 April 2018||From 1 April 2018||From 1 April 2018|
|From 1 April 2019||From 1 April 2019||From 1 April 2019|
It seems the total tax take by the Treasury is hardly changed over the coming years, from earlier estimates.
Autumn Budget 2017. 22nd Nov 2017. APD frozen from April 2019 for standard class air travel.
Air Passenger Duty (APD) – Short-haul APD rates for 2019-20 will remain frozen as they have been since 2012. The long-haul rate for economy passengers will be frozen at the 2018-19 rates while the rates for premium economy, business and first class will increase by £16 and for those travelling by private jet by £47. (12)
Hammond’s budget also says: Early in 2018, the government will publish a call for evidence which will consider the impact of VAT and APD on tourism in Northern Ireland, to report at Budget 2018.
Policy paper: Air passenger duty: rates from 1 April 2019 to 31 March 2020
“This measure freezes short-haul and reduced long-haul APD rates for the tax year 2019 to 2020 and therefore keeps costs down for the vast majority of passengers. Overall revenues from APD continue to rise in line with the retail prices index (RPI) helping to contribute towards general taxation.”
Section 30 of Finance Act (FA) 1994 sets out the rates of APD.
Legislation will be introduced in Finance Bill 2017-18 to amend section 30 of Finance Act (FA) 1994. The rates will be as follows:
From 1 April 2019
|Bands (distance in miles from London)||Reduced rate (lowest class of travel)||Standard rate (other than the lowest class of travel)(1)||Higher rate (2)|
|Band A (0 to 2000 miles)||£13||£26||£78|
|Band B (over 2000 miles)||£78||£172||£515|
(1) If any class of travel provides a seat pitch in excess of 1.016 metres (40 inches) the standard rate is the minimum rate that applies.
(2) The higher rate applies to flights aboard aircraft of 20 tonnes and above with fewer than 19 seats.
Summary of impacts
Exchequer impact (£m)
|2017 to 2018||2018 to 2019||2019 to 2020||2020 to 2021||2021 to 2022||2022 to 2023|
These figures are set out in Table 2.1 of Autumn Budget 2017 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2017.
This measure is not expected to have any significant macroeconomic impacts.
Behavioural responses were included to take into account the change in the number of passengers in response to changing airfares.
Impact on individuals, households and families
This measure will impact on some individuals, households and families who travel by air. Freezing the short-haul and reduced long-haul APD rates for the tax year 2019 to 2020 will keep costs down for the vast majority of passengers. However, increasing the standard and higher long haul rates will mean some passengers will pay more for their flights.
The measure is not expected to impact on family formation, stability or breakdown.
This measure will impact on those who travel more by air. Some protected characteristics are likely to be over represented in the class of people who travel by this means.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on approximately 800 airlines and aircraft operators. One-off costs include familiarisation with the new rates and updating systems to include the new rates. It is not expected that there will be any on-going costs. There is no impact on civil society organisations.
Operational impact (£m) (HM Revenue and Customs (HMRC) or other))
Costs to HMRC of implementing this change are expected to be negligible.
Other impacts have been considered and none have been identified.
These numbers are unchanged, up to 2021, from those produced up till then in the Autumn 2015 budget.
There was no change to APD in Chancellor Philip Hammond’s Spring Statement on 7th March 2017
The Budget just said: “3.26 Air Passenger Duty (APD) – APD rates for 2018-19 will be uprated in line with RPI. To provide good notice for the airline industry, rates for 2019-20 will be set at Autumn Budget 2017.”
Briefing from Stop Stansted Expansion:
Air Passenger Duty – Key Points
1. APD was introduced in 1994 by Ken Clarke, the then Chancellor of the Exchequer, not as an environmental tax but because he considered the aviation industry to be lightly taxed compared to other sectors, largely arising from its exemption from fuel duty and VAT. It was initially set at £5 for short haul economy flights.
2. In 1997 the rate of APD for short haul economy flights was increased to £10. Short haul is where the destination ‘band’ is less than 2,000 miles from London.
3. APD is payable only on departure from a UK airport and so it is payable on both legs of a domestic round trip but only on the outward leg of a round trip to an overseas destination.
4. Gordon Brown halved the short haul economy rate of APD in 2001, put it back up again to £10 in 2007 and Alistair Darling raised it to £11 in 2009. George Osborne increased it to £12 in 2010 and then to £13 in April 2012 and it has since been frozen at that level. In his November 2017 Budget, Philip Hammond announced that the short haul economy rate of APD will continue to be frozen at £13 until (at least) 31 March 2020.
5. The latest HMRC statistics show that 79% of air passengers pay the lowest rate of APD. Thus, for almost four in five air passengers, APD will have increased by just £3 between 1997 and 2020 – a period of 23 years.
6. APD raised £3.2 billion for public finances in 2016/17 and this is planned to increase to £4.0 billion by 2022/23, helped by higher rates for premium class travel and an expected annual increase in overall air travel.
APD would, however, need to rise to about four times its current level to offset the value of the industry’s exemption from fuel duty and VAT.
BRR – Nov 2017
Industry had its traditional whinge:
Air tax to rise on premium tickets
Air passenger duty on short-haul and long-haul economy flights will be frozen from April 2019, but the tax on premium long-haul tickets will increase.
Chancellor Philip Hammond announced that private flights will also be taxed more heavily from 2019.
Delivering his 2017 Budget, the Chancellor said the increases would pay for the freeze in APD on the cheapest tickets, which, he said, would help families and businesses.
However, the travel industry was disappointed the Chancellor didn’t announce a cut in APD. ABTA’s director of public affairs Alan Wardle said: “We recognise there were tough decisions for the government in this Budget and freezing APD for leisure travellers is a welcome step forward.
“However, we believe this is a missed opportunity to decisively cut this tax. We will continue to have the highest levels of APD in Europe and amongst the highest in the world. We will continue to push for a substantial cut which will help travellers and ensure the UK is well placed to trade with the rest of the world post Brexit.”
Flybe said in a statement: “We are disappointed that the Chancellor has once again missed the opportunity to lower Air Passenger Duty.
“The UK’s APD is among the highest in the world and it is a highly damaging tax which penalises domestic travelers. Reducing APD and supporting domestic aviation would have been in line with the Government’s stated aim of spreading economic growth more evenly across the UK – this is sadly another missed opportunity to act.”
The move to increase APD on premium long-haul air fares was criticised by business travel agent American Express.
Jason Geall, vice president Northern Europe, American Express Global Business Travel said: “We are extremely disappointed by the Chancellor’s decision to increase air passenger duty on long-haul business travel.
“On one hand the Government talks about forging new trade relationships with non-EU marketplaces, while on the other it increases the cost for businesses to travel and trade.
“What was initially introduced as an environmental tax has become a stealth tax on trade. This is a massively shortsighted decision made by a Chancellor who purports to be pro-business.
“Much has been said about the post-Brexit UK being an outward-facing, export-led economy; but these words must be matched by action on airport expansion in the southeast, improving transport links to regional airports and the removal of APD.”
He said the business travel agency and its clients were concerned too about the government’s lack of progress on Brexit negotiations.
“Uncertainly of this nature is bad for business. We do not yet know how the separation will impact business travel. Questions about border controls, travel visas, data privacy, travel and health insurance, open skies and air passenger rights are being asked, but there are no answers.
“GBT is in regular contact with parliamentarians and civil servants, and while we are encouraged to hear about plans to develop trade opportunities in non-EU marketplaces, talk is cheap. For the good of the economy and British business, decisions need to made very soon.”
Southend Airport’s owners Stobart Aviation said the partial freeze on APD was ‘woefully short’ of what is needed. It is calling on the Government to abolish APD for smaller airports.
The Chancellor said he woud deliver a review on the impact of APD on Northern Ireland tourism, which has to compete with lower tax rates in the south of Ireland, at next year’s Budget.
UKinbound, chief executive officer Deirdre Wells OBE said: “It’s encouraging to hear APD feature on the Government’s agenda and that this tax on trade will be frozen on all short-haul and long-haul economy flights.
“We’re also pleased to hear that a review will be undertaken regarding the impact of APD and VAT on tourism in Northern Ireland. However, APD’s detrimental effect on businesses across England, Scotland and Wales should also be investigated. The Government’s commitment to a Brexit ready Britain will be undermined if the review does not cover all four corners of the UK.”