16 March 2016

Air Passenger Duty (APD) was introduced in 1994 with a £5 rate for the UK/EU and £10 elsewhere.

Since then, it’s seen several increases and a doubling for passengers travelling other than in economy class (Reduced Rate = economy class; Standard Rate = premium class).

Four geographical bands were introduced in 2009 based on the distance from London to the capital city of the country concerned (with the exception of the Russian Federation which is split east and west of the Urals). Bands C and D were abolished in April 2015, with those destinations subsequently charged at band B rates.

The Government devolved APD on direct long-haul flights from Northern Ireland (those where the first part of the journey is to a destination outside Band A) to the NI Executive and, effective 1 January 2013, these were set at £0.

On 22 January 2015, as part of the Scotland Bill, the devolution of APD to Scotland was announced.  The Scottish Government has since committed to reducing APD by 50% over the term of the next Scottish Parliament between 2018 and 2021, and to abolishing it completely when public finances allow.

On 27 February 2015, under the St David’s Day Agreement, the Government announced that it is considering the case and options for devolving APD to the Welsh Assembly.

APD on economy flights for children under 12 was abolished from 1 May 2015. APD for under 16s was abolished from 1 March 2016.

APD rates increased in line with inflation on 1 April 2016 and the RPI uprating will continue in 2017. The future rates are shown alongside the current ones:

Bands (approximate distance in miles for the UK) Reduced rate Standard rate
  Rate from 1 April 2016 Rate from 1 April 2017 Rate from 1 April 2016 Rate from 1 April 2017
Band A (0-2000 miles) £13 £13 £26 £26
Band B (over 2000 miles) £73 £75 £146 £150

The tables specifying which countries and territories fall into each of the APD bands can be found on the HM Revenue & Customs website (Appendix 1).

Per the Office of Budget Responsibility (OBR) forecasts, APD is expected to provide £3.1bn receipts in 2015-16, rising to £3.7bn by 2019-20.

ABTA’s position

ABTA accepts that aviation should pay its proper environmental cost but believes that cost is more than reflected in the current APD levels.

ABTA has campaigned vigorously with its trade partners through the A Fair Tax on Flying campaign (see below) to have APD frozen until a proper economic impact assessment of APD is carried out by HM Treasury.

ABTA believes the general public must not be disenfranchised by the Government using economic instruments as a means of raising the costs of aviation and that UK travellers should not be penalised. Tax rises are socially regressive and will impact most upon those who can least afford it and lead to families being priced out of taking flights. This is especially acute for lower socio-economic groups and ethnic minorities visiting friends and relatives abroad.

ABTA welcomed the changes to the banding system as a first step in the reform of this damaging tax. Moving all long-haul flights into Band B of APD will save passengers and businesses over £200m annually, and should boost travel and tourism as well as promote greater UK connectivity.

ABTA welcomed the announcement by the Chancellor that APD would be scrapped on economy flights for children – a clear indication that the Government listened to the case made by the A Fair Tax on Flying campaign to ‘Scrap the Tax on Family Flights’.

ABTA further welcomed the Scottish devolution announcement as good news for passengers flying from Scotland and for Scottish airports and travel businesses.  ABTA  attends the Scottish APD Stakeholder Forum looking at the implementation of a Scottish levy. 

ABTA has continued to call for a reduction in overall rates of APD across the whole of the UK to ensure that rates of APD are consistent and competitive for the benefit of the whole of UK plc and all UK consumers.  APD continues to inhibit the contribution of the travel and tourism sector to growth and employment.

A Fair Tax on Flying campaign

ABTA is a founding member of the A Fair Tax on Flying campaign, an alliance of more than 30 leading travel organisations including airlines, airports, trade associations and destinations who believe that APD is too high and that it is negatively impacting on the economic competitiveness of the UK. The campaign is calling on the Treasury for a significant reduction in APD pending commissioning a comprehensive study into the full economic effects of aviation tax in the UK, including its impact on employment.

For more information, please visit www.afairtaxonflying.org or visit our Facebook page.