Sunak halves domestic APD and introduces a band of over 5,500 miles (costing just £5 more)
Air Passenger Duty is the only tax paid on air travel, as it pays neither fuel tax nor VAT. The rate has been £13 for a return economy flight to anywhere in Europe, since April 2012. The price is £82 for trips of over 2,000 miles. Until April 2015 there were four distance bands for APD. Adults on domestic flights paid £13 for each part of the return trip, ie. £26 return. Now the Chancellor has halved the rate of domestic APD, from April 2023, so it would just be £13 for a return trip. The claim is that this helps connectivity within the UK, being useful for those in Scotland and Northern Ireland. Flights within the UK are usually cheaper than rail tickets, and cutting APD sends completely the wrong signal, in making flights even cheaper – when what would help cut CO2 would be to reduce the cost of rail travel. Riski Sunak has introduced a new distance band for APD, so instead of just the two bands – of under, or over, 2,000 miles – a new band is added – of over 5.500 miles. This is from April 2023. But the increased APD level will just be £91. The rate for trips of over 2,000 miles will be £84 from April 2022, and if it rises by £2 per year, which is usually does, would be £86 by April 2023. So the higher rate will be just £5 more. Not much of a disincentive, or help to reduce CO2. Treasury expects £35 million less per year from APD after 2023.
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Treasury page on APD rates
https://www.gov.uk/guidance/rates-and-allowances-for-air-passenger-duty#rate-bands
The Budget in March 2021
This kept APD for flights of under 2,000 miles at just £13 for a return flight, and an inflation increase of £2 for flights longer than that. Domestic APD remained at £13 for both parts of a return domestic flight.
AUTUMN BUDGET AND SPENDING REVIEW 2021 – October 2021
Sunak halved the tax on domestic flights, which are already far cheaper and more polluting to take than trains. Air passenger duty was increased by £4 on “ultra-long” flights over 5,550 miles, from £87 to £91. But Sunak said: “Less than 5% of passengers will pay more.” Overall, the changes are a tax giveaway of £30m a year.
Treasury document :
Some quotes from it:
The Budget also reduces the cost of Air Passenger Duty on domestic flights to support greater air connectivity within the UK. The government is also introducing reforms to modernise the UK’s Tonnage Tax regime, to ensure that the British shipping industry remains highly competitive. Furthermore, the government is designing a border which embraces innovation and simplifies processes for traders and travellers.
2.183 The government is introducing a package of Air Passenger Duty (APD) reforms that
will bolster UK air connectivity through a 50% cut in domestic APD, and further align with UK
environmental objectives by adding a new ultra-long-haul distance band.
3.34 To make travel across the UK more accessible, a 50% cut in Air Passenger Duty will apply to flights between airports in England, Scotland, Wales and Northern Ireland (with the exception of private jets). This will make travel cheaper for around 9 million passengers in 2023-24, and benefit connectivity between Northern Ireland and Great Britain.
5.48 Aviation tax reform – From 1 April 2023 to support connectivity across the UK the
government will be introducing a new domestic band for Air Passenger Duty (APD), covering
flights within the UK. In addition, the government will introduce a new ultra-long-haul band,
covering destinations with capitals located more than 5,500 miles from London to align APD
more closely with the government’s environmental objectives.
Page 135
Impact of the policy decisions in the spending review:
Air Passenger Duty: introduction of a new reduced domestic band and ultra-long haul distance band
Tax
No impact till 2023.
Then minus – £35 million in 2023-4, and 2024-5
and minus – £30 million in 2025-6 and 2026-7.
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Air passenger duty (£ billion) anticipated in March 2021 budget
2019-20 £3.7 billion
2020-21 £ 0.6
2021-22 £1.3
2022-23 £2.0
2023-24 £3.1 (Oct 2021 – now expected to be £35 million less – ie. £3.065bn)
2024-25 £4.3 (Oct 2021 – now expected to be £35 million less – ie. £4.265bn)
2025-26 £4.4 (Oct 2021 – now expected to be £30 million less – ie. £4.370bn)
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Until 2015 there were 4 distance bands for APD.
And economy ticket would cost:
£13 for up to 2,000 miles.
£67 for 2,000 – 4,000 miles.
£83 for 4,000 – 6,000 miles.
£94 for over 6,000 miles.
This was then reduced to just two bands, up to 2,000 miles, and over 2,000 miles (based on the distance of London to the country’s capital).
From April 2021 an economy ticket would cost:
£13 for up to 2,000 miles
£82 for over 2,000 miles. [Then £84 from April 2022]
with higher rates for premium class travel.
See more historic details at https://www.airportwatch.org.uk/air-passenger-duty/
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Green campaigners hit out at Sunak’s tax cut on domestic flights
Rail industry also critical of decision to halve air passenger duty on journeys within the UK
By Camilla Hodgson and Philip Georgiadis
OCTOBER 27th 2021 (Financial Times)
Environmental campaigners have criticised the UK government for delivering a “shockingly bad” Budget that failed to set out how it would fund its net zero carbon target and lacked green spending commitments.
Green groups reacted with disbelief on Wednesday that Rishi Sunak, the chancellor, announced plans to cut taxes for domestic flights just days before the UK is due to host global leaders at the COP26 UN climate summit in Glasgow.
The government will halve domestic air passenger duty to £6.50 per flight from April 2023, which it said would leave around 9m passengers paying less to fly between England, Scotland, Wales and Northern Ireland.
Sunak said the measure would fix an inconsistency that has seen people pay more tax to fly domestically than abroad, boost struggling regional airports and “bring people together across the United Kingdom”.
But Paul Tuohy, chief executive of green lobby group Campaign for Better Transport, hit out at the move. “In the looming shadow of the climate emergency and with COP26 just days away, the decision to cut air passenger duty on domestic flights is utterly wrong-headed.”
Sam Alvis, head of green renewal at Green Alliance said it was an “incredibly bizarre approach from the chancellor to sideline net zero, which is one of the government’s major priorities, ahead of COP26.”
Andy Bagnall, director-general of the Rail Delivery Group, which includes state-owned Network Rail along with the operators that were effectively nationalised during the coronavirus pandemic, was also critical of the move.
“If the government is serious about the environment, it makes little sense to cut air passenger duty on routes where a journey in Britain can already be made by train in under five hours,” he said, pointing out that the cut in APD would lead to an extra 1,000 flights a year as 220,000 people shifted from rail to air.
The Budget was seen as an opportunity for ministers to lay out how they plan to fund the goal of achieving net zero greenhouse gas emissions by 2050. It had also been billed as a test of Sunak’s commitment to the green agenda, ahead of next week’s high profile summit.
Although the government published its long-delayed net zero strategy last week, experts said it lacked detail on funding despite a pledge from ministers to “embed” the 2050 target in spending decisions. The Climate Change Committee, which advises the government, pointed out it had yet to do “as we had recommended.”
Sunak offered no major new green spending promises. Instead, he re-announced an array of previous commitments, such as a £3.9bn funding package to help decarbonise buildings.
Mike Childs, head of policy at Friends of the Earth, described the Budget as “shockingly bad”, adding that it did little to show the government recognised “the enormity of the climate crisis we face.”
The government had consulted on APD reform earlier this year and in its response that was published on Wednesday acknowledged the “environmental impact” of lowering the tax. But it also said the cut could deliver “social and economic benefits” with airlines launching new routes and people flying more frequently.
Although the majority of aviation emissions come from international flights, campaigners said people should be incentivised to travel on low-carbon forms of transport such as trains, rather than fly.
Sunak acknowledged the environmental impact of long-haul flights by raising the tax on trips of more than 5,500 miles, a move that will cost economy passengers £91.
https://www.ft.com/content/998ebb23-8dfb-49fb-91b7-821001d8e081
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