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Every week from now, the chancellor will likely be rehearsing for her first Budget. With rises in the most vital taxes – reminiscent of revenue tax and VAT – dominated out, Air Passenger Duty (APD) appears ripe for an enhance.
This tax on flying applies to travellers flying from most UK airports. The charge will depend on two issues:
- the class you journey in – low-cost seats or one thing extra comfy
- the last vacation spot in your ticket, broadly UK, Europe/north Africa, long-haul and ultra-long-haul
Age is an element: for primary economic system, under-16s keep away from tax however in premium courses, solely the under-twos go free.
APD at the moment ranges from £7 for a home flight in economic system class to £202 in a premium cabin to a far-flung vacation spot in Asia, Australasia or Latin America. Private jets are way more closely taxed.
The majority of travellers pay £13 for a hop to Europe or north Africa.
The final Conservative Budget set charges for April 2025 to enhance by £2 for intercontinental economic system passengers in addition to premium travellers inside Europe. Sharper rises will apply for long-haul premium passengers, taking the prime charge to £224. A household of 4 travelling to Bangkok, Hong Kong or Singapore from 1 April subsequent yr pays nearly £900 to the authorities for the proper to go away the nation – or presumably extra if Rachel Reeves decides to goal the traveller.
The Office for Budget Responsibility says: “In 2024-25 we estimate that APD will raise £4.5bn. That represents 0.4 per cent of all receipts and is equivalent to around £150 per household and 0.2 per cent of national income.”
Extracting, say, an extra £1.5bn from passengers should be tempting for the Treasury. Air Passenger Duty has been common with each chancellor because it was invented three a long time in the past by the Conservative Ken Clarke, for 3 good causes:
- It’s straightforward to gather (the airways merely ship a cheque every month) and tough to keep away from
- It’s hidden in the headline airfare – and for enterprise travellers working for large corporations, it received’t even be seen
- Unlike many taxes, practically half the individuals who pay APD are abroad travellers and subsequently don’t vote in British elections.
Yet any tax enhance has penalties. It’s not essentially a good suggestion to tax the traveller till – in the phrases of earlier Labour chancellor Denis Healey – the pips squeak. In a bid to assist Ms Reeves and her officers as they determine their subsequent transfer, I shall set out the attainable results.
1. Deterring inbound guests
Overseas vacationers can not vote in our elections however they will vote with their ft – and go someplace else in the event that they really feel fares to and from the UK are too excessive. Inbound tourism is a big profit to any nation – together with tax income, with no VAT to gather on their lodge stays, theatre visits and restaurant meals.
2. Premium economic system emptying
Recent rises in APD have been loaded onto premium travellers – charges have elevated a lot sooner than inflation. These apply to each ticket that comes with a seat pitch (distance from the entrance of 1 seat to the entrance of the subsequent) of at the least 40 inches. The people who find themselves at the moment paying £194 in tax for each member of their household for a visit to Florida have their limits on how a lot further they may pay for premium economic system.
A senior aviation determine says: “A lot of the bounceback in premium cabin occupancy has actually been in leisure travellers, who are spending their own money. The idea that raising more on the backs of business travellers is a ‘victimless crime’ because it becomes a decimal point in some bank’s travel budget is simply not the case.”
I generally pay further for premium economic system – however solely when flying again to the UK, when no tax applies. I predict the premium economic system cabins could begin wanting emptier, with an enormous squeeze as passengers transfer again to the low-cost seats.
3. More avoidance of excessive charges of APD
On my final two transatlantic journeys, I purchased an affordable flight to Dublin and booked a separate ticket to the US and Canada respectively, saving a helpful £75 in Air Passenger Duty every time. The Irish airport additionally has pre-clearance of American border formalities, that means you arrive in the US as a home passenger – doubtlessly saving an hour or two of ready in line. Going to Asia, Africa and Australia, Turkish Airlines is an effective guess: keep at the least 24 hours in Turkey’s largest metropolis earlier than your onward long-haul flight, and also you save sufficient tax to pay on your stopover lodge.
The larger APD goes, the extra of us will likely be utilizing such completely authorized methods to keep away from or cut back the tax.
I can, although, provide one tax-raising thought: scrap the “Inverness Immunity”. Passengers flying from airports in the Scottish Highlands and Islands area are exempt from Air Passenger Duty – even when they’re heading in first-class to the ends of the earth.
Every day, some individuals fly to Inverness not to take pleasure in the many points of interest of the metropolis and area however to flip round and fly away on KLM by way of Amsterdam or British Airways by way of Heathrow. Close this loophole, and the surroundings – in addition to the Treasury – will profit.
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