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Northern Ireland Set For Flight Tax Cut

by Jason Gorringe, Tax-News.com, London

28 September 2011


Northern Ireland is to see its rate of air passenger duty (APD) drop in relation to the rest of the UK, with the government also looking at devolving aspects of the tax to the local assembly.

Chancellor of the Exchequer George Osborne, in consultation with the Secretary of State for Northern Ireland Owen Paterson and the Northern Ireland Executive, announced on September 27 that, from November 1, APD will be slashed for those passengers travelling on direct long-haul routes departing from airports in Northern Ireland.

As a result of the change, the direct long-haul rate of APD will fall to the lower short-haul rate – currently GBP12 (USD19) per passenger in economy class and GBP24 for business and first class passengers. The cost of reducing APD in Northern Ireland will ultimately fall to the Northern Ireland Executive in accordance with the requirements of European Union law in relation to devolved taxes.

The decision follows a consultation held earlier this year on the prospect of an APD cut, which closed in June. The government will deliver a full response to the consultation by the end of the autumn. The Treasury recognizes that Northern Ireland’s airports operate in unique circumstances within the UK. It notes that the land border with the Republic of Ireland, a country offering differential rates of air passenger tax, had threatened to make long-haul flights from Belfast uneconomic.

The government is also set to launch a parallel process to devolve aspects of APD to the Northern Ireland Assembly, in recognition of its unique circumstances. The precise scope of devolution will be agreed in cooperation with the Northern Ireland Executive.

Announcing the move, Osborne said: “The government has taken proactive measures to protect the only direct long-haul service operating from Northern Ireland and with it the jobs of those who serve the Belfast route. Northern Ireland faces a unique challenge in attracting traffic – including very valuable business customers – into its airports. By announcing this immediate cut and our intention to devolve aspects of APD, the UK government is renewing its commitment to stimulating and rebalancing the Northern Ireland economy.”

Paterson added: “This is really good news for Northern Ireland. Our priority is to protect jobs and help create more jobs. First-rate transport links are essential to Northern Ireland’s future prosperity and that is why we have worked so hard with the Chancellor on this issue."

TAGS: tax | business | air passenger duty (APD) | Ireland | aviation | United Kingdom | tax rates

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