Aviation Tax Switches To Planes

by Jason Gorringe, Tax-News.com, London

12 October 2007

As part of the plans to tackle the ongoing problem of climate change, the UK government has announced plans in the Pre-Budget Report to replace Air Passenger Duty (APD) with a duty payable per plane rather than per passenger, from 1 November 2009.

The new per plane aviation duty aims to ensure that the aviation industry makes a greater contribution to covering its environmental costs. The Government will work closely with industry and stakeholders to consult on the detail of this tax, and will begin a consultation shortly.

This consultation will consider ways to make aviation duty better correlated to distance travelled, in addition to methods of encouraging more planes to fly at full capacity.

In introducing this duty, the Government will also take into account the impact on freight and transit and transfer passengers, consistent with its wider economic and social objectives.

Following earlier consultation, with effect from 1 November 2008, the Government will also correct an anomaly to ensure passengers in business class only flights are liable for the standard rates of Air Passenger Duty.

Commenting on the news, Mike Rutter, the Chief Commercial Officer of Flybe observed that: “Aviation is crucial to the UK economy, and in particular the UK regions. As the Chancellor constructs his new tax it is crucial he does not penalise isolated areas, dependent on transport, with a one-size-fits-all tax. He must instead adopt a more tailored approach with the carbon foot print of each aircraft at the front of his mind."

Air Passenger Duty rates will be frozen at their current rates for 2008/2009.

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