Air Passenger Duty yesterday increased in line with inflation, and for the first time now extends to cover business jets.
AEF supports the use of APD to help offset the benefit to the aviation industry of its exemption from fuel duty or VAT, and we have previously highlighted the loophole by which business jets have so far escaped coverage. Although APD is not an environmental tax, the fact that business jets are responsible for 3 to 8 times the emissions per person compared with a comparable journey in a commercial aircraft (depending largely on whether the comparison is with an economy or business class seat) adds further justification to the Government’s decision.
A table of the updated charges is included in this previous article. Around three quarters of all UK flights fall in the ‘short haul economy’ class. For these flights, there has been no increase to the rate of £13 for a return trip. Small increases have been applied to journeys longer than 2000 miles. Recent assessment suggests that these changes will have no significant impact on levels of aviation demand (see footnote to Figure 8.2 of UK Aviation Forecasts 2013 – link below), despite vocal campaigning against them by the aviation industry.
A change to the definition of ‘chargeable passengers’ means that people travelling in business jets will be covered by APD for the first time. For smaller jets of 5.7 to 20 tonnes, passengers will pay the current ‘standard’ rate, which in fact applies to business and first class seats. In addition a new, ‘higher rate’ category (beginning at £52 per passenger for a return trip) has been introduced for luxury business jets, defined as aircraft of 20 tonnes or more designed to carry fewer than 19 passengers.
‘Transfer’ passengers, who are using a UK airport as a hub to reach another destination, will continue to be exempt from APD and thus pay no UK tax.