A new fairer structure for Air Passenger Duty was announced by the Chancellor today, at a revenue cost to the Exchequer of UK Pounds 80 million in 2001/02.
Duty on economy flights within the European Economic Area (EEA) will be halved from UK Pounds 10 to UK Pounds 5 from April next year. On top of this, there will no longer be any duty to pay on flights from airports in the Scottish Highlands and Islands.
Part of the cost of these changes will be met by removing the duty exemption for return flights within the UK in order to comply with European law.
After all these changes, duty on all economy flights from the UK to other parts of the EEA will be halved to UK Pounds 5. Duty on single flights within the UK will be halved to UK Pounds 5. There will be no change in duty on return flights within the UK, and even lower rates on flights from the Scottish Highlands and Islands.
The standard rates for those travelling first or club class will remain at the current UK Pounds10 for destinations in the EEA and will rise to UK Pounds 40 to other destinations. These changes will make the duty fairer by bringing the rate of duty more in line with the cost of travel.
The changes will come into effect from 1 April 2001, to allow airlines and tour operators plenty of time to adjust their marketing and pricing strategies to the new structure.
The changes announced today will:
– introduce new reduced rates of duty for economy fares of UK Pounds 5 for flights to EEA countries and UK Pounds 20 to other countries. The standard rates will be UK Pounds 10 for flights to EEA countries and UK Pounds 40 to other countries. This structure will make the duty fairer;
– exempt from duty flights from airports in the Scottish Highlands and Islands. This exemption has been introduced in recognition of the remoteness of this region and its dependence on air travel as part of everyday life; and
– remove the exemption from duty for the return leg of a flight within the UK. This exemption, introduced under the last Government, must be removed to ensure compliance with European Treaty obligations.
NOTES FOR EDITORS
1. At present, air passenger duty is payable by airlines on the number of passengers on board a plane on departure from a UK airport. The rate is UK Pounds 10 per head if the flight is a domestic one or to a destination within the EEA or UK Pounds 20 where the destination is elsewhere.
2. On return flights within the UK, there is an exemption from duty for the return leg. However, that exemption has been found to be incompatible with European law, and, in order to comply with European Treaty obligations, the Government has had to amend domestic law.
3. Air passenger duty receipts for the year 1998/99 were UK Pounds 837 million.
4. Details for businesses are available in Budget Notice 49/2000 which is available from Customs and Excise Advice Centres and from the Customs and Excise Internet site.
Report argues that the government must change the way it makes tax and budget decisions
Drastically fewer offices for HMRC in the hope to reduce their running costs
Tayabali Tomlin and d&t directors launch £20 a month TaxGo service, aiming to be the 'biggest UK firm' by client numbers
Companies must report on their complex financial structures including offshore accounts and notify HMRC