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Rishi Sunak might bring back 3 or 4 band APD, with a higher long-haul rate, but lower domestic rate
Air Passenger Duty (APD) is currently charged in two bands, to destinations under 2,000 miles (£13 for passengers aged over 16) and above 2,000 miles (£82), with business class passengers paying more, and more for private jets. There was a consultation about rates of APD and the distance bands earlier in the year. It is thought that the Chancellor will announce, in his autumn budget, that APD will be reduce for domestic flights (passengers pay £26 for a return domestic flight, but only £13 for a return European flight). Until 2015 there were four bands for APD, with under 2,000 miles, 2,000 to 4,000, 4,000 to 6,000 and over 6,000 miles. It is thought likely that Rishi Sunak will bring back the higher distance band, for higher APD for flights of over 6,000 miles. It currently makes no sense, in terms of carbon emissions, that the APD on a flight to Cairo or Dubai is the same as one to Thailand or Australia. Scrapping the APD on domestic flights does not help encourage people to take the train, when often the journey by train is quite easy – but far more expensive. A recent trial by campaigners compared the train and plane between central London and central Edinburgh. The plane was two minutes faster. UK aviation is seriously under-taxed, paying no VAT and no fuel duty.
Cost of flights to rise as Rishi Sunak prepares to raise air passenger duty
Exclusive: chancellor to boost green credentials by hitting environmentally damaging long-haul flights
Travellers to destinations including Australia, South Africa and Japan can expect to pay more to fly, as Rishi Sunak prepares to overhaul air passenger duty in next week’s budget to reflect the environmental damage wrought by long-haul flights.
The chancellor is keen to burnish his green credentials after a week in which he was accused of failing to back Boris Johnson’s net-zero pledges with sufficient resources.
It is understood that he will announce that a reform of the tax, mooted earlier this year, will go ahead, with a higher rate levied on the longest journeys.
Air passenger duty (APD) is paid by airlines, who tend to pass much of the costs on to their customers.
It is currently charged in two bands, to destinations under 2,000 miles and above 2,000 miles, with business class passengers paying more. The maximum levied per passenger is currently due to rise to £554 next April.
In a consultation document published alongside the March budget, the treasury set out several options for reforming APD. Its favoured approach was a new, three-band structure, with destinations more than 6,000 miles away facing the highest charge.
There is also expected to be a new, lower rate for domestic flights. Such a move is likely to be sold as encouraging levelling up and protecting the Union by fostering connectivity between the nations and regions – though it could be controversial where there are viable public transport alternatives such as train routes.
Environmentalists are likely to reject reforms of APD as much too modest to have an effect on curbing the demand for polluting flights.
The New Economics Foundation (NEF) thinktank has called instead for a frequent flyer levy that would see regular air passengers pay more for the second and subsequent flights they take in a year. NEF research shows that 15% of people take 70% of flights.
Ministers published a “jet zero” strategy in the summer aimed at reducing emissions from air transport, but it is widely regarded as a more difficult challenge than cutting pollution from car travel or domestic energy.
The government is keen to demonstrate that it has a coherent plan for hitting its decarbonisation targets, ahead of the critical Cop26 meeting opening next week in Glasgow.
Sunak is expected to present his budget as rebuilding the economy and boosting its resilience after the tough pandemic period – but he is also likely to acknowledge challenging headwinds, including volatile global energy prices and supply shortages.
The chancellor has also made clear in recent weeks that he is concerned about the increasing risk of inflation, which the Bank of England’s chief economist Huw Pill has suggested could top 5% in the coming months.
That could see consumers facing what Labour has called a “cost of living crisis”, with energy bills increasing, national insurance contributions set to rise in April and universal credit cut by £1,000 a year for millions of low-income families.
Treasury sources denied reports of a VAT cut on domestic fuel bills to help families cope with the soaring costs of heating their homes, but the chancellor could opt for more targeted measures to cushion the blow for some households.
See more about Air Passenger Duty, over recent years at
https://www.airportwatch.org.uk/air-passenger-duty/
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See earlier:
Treasury consulting on APD distance bands change; perhaps to 3 or 4 (just 2 now)
The Treasury has a current consultation on “Aviation Tax Reform.” Part of it is whether the level of Air Passenger Duty (APD) on domestic flights should be changed. Currently a passenger on a return domestic flight pays £13 x2 = £26, as they leave a UK airport twice. The cost is only £13 for a return flight to a European (under 2,000 miles) destination. They are also consulting about whether there should be more bands for APD for longer journeys. The government is aware that air travellers should pay more, if they fly further and thus cause the emission of more carbon. In 2008 it was decided there would be 4 distance bands with increasing APD costs; under 2,000 miles; 2,000 – 4,000; 4,000 to 6,000; and over 6,000. But in 2014 this was changed to just two bands, under and over 2,000 miles. The consultation asks if the bands should be changed; if they should revert to the 4 levels there were between 2008 and 2014; or if there should be a new system, with three bands. These would be under 2,000 miles; between 2,000 and 5,500 miles; and over 5,500 miles. There were some potential technical difficulties with very large countries – eg. the US or Russia – so only considering the capital city, to categorise the country, can be unfair. Consultation closes 15th June 2021.
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Government advised to halve domestic APD and review distance bands for the tax
Boris Johnson is set to authorise a 50% cut in APD for domestic flights. Senior Whitehall sources say he will announce a review of the tax, which is the only tax on air tickets (on which no tax or VAT is paid). Currently APD is charged at £13 for any adult leaving a UK airport, so that is the cost for any return flight to anywhere in Europe. For domestic flights (for which there is usually a rail alternative) the tax is £26, so it is charged on leaving both airports. The review will also look at the case for increasing the number of international distance bands. Since 2015, there have only been two bands, one covering flights of up to 2,000 miles and the other those in excess of that. The plans to change APD will be put to a consultation, so it is unlikely to be introduced until 2022. The recommendations are part of a wider Union Connectivity Review by Sir Peter Hendy, the chairman of Network Rail, to be published on 10th March, proposing a new “UK Strategic Transport Network” to oversee British transport priorities. Critics say the 50% domestic APD cut — coming just days after fuel duty was frozen for the 10th consecutive year — and rail fare rises, further undermine ministers’ commitment to cutting carbon a target of net-zero carbon by 2050. Doug Parr, chief scientist for Greenpeace UK, said this would “continue our nonsensical trend of the higher the carbon, the lower the tax.”
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APD to rise on long-haul only (>2,000 miles) from £80 to £82 from April 2021 – no change in short haul £13 APD
Air Passenger Duty (APD) – the UK duty on flights – is set to increase for flights of over 2,000 miles, in April 2021. The APD will rise from £80 now to £82, for a return flight – APD is only charged on departures. For premium class air tickets of over 2,000 miles, the APD will rise by £4 from £176 to £180. There will be no increase in APD for flights under 2,000 miles, which means any flight in Europe, which will continue to pay just £13 for a return trip (£26 premium class). The rate for long-haul private jet etc rises from £528 to £541. (The distance is measured from London to the capital city of the destination country.) This tiny APD rise is not doing to deter anyone flying. The increase come despite calls from the aviation industry to freeze or even scrap APD due to the problems the sector has because of the Covid pandemic. There have been many calls for APD on domestic return flights to be scrapped, (as the APD is £26, not the £13 for a European flight) but there is no mention of those in the government announcement. Perhaps the government appreciates that airlines take money out of the UK, and passengers to foreign leisure trips, o a far greater extent than they bring money in.
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April 2015
New rates of APD after 1st April 2015 compared with during 2014:
| Lower (standard) rate | Higher rate | |||
| 2014 | From 1.4.2015 | 2014 | From 1.4.2015 | |
| Band A. 0 – 2000 miles | £13 | £13 | £26 | £26 |
| Band B. 2000 – 4000 miles | £69 | £71 | £138 | £142 |
| Band C. 4000 – 6000 miles | £85 | £71 | £170 | £142 |
| Band D Over 6000 miles | £97 | £71 | £194 | £142 |
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