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Air passenger duty (APD) is charged on all passenger flights from UK airports.  The rate of duty varies according to passenger destination and the class of passenger travel.[1]  APD is estimated to raise £3.7 billion in 2018/19.[2] 

Some commentators have argued that APD should be charged on planes rather than passengers, to provide better incentives for passengers and airlines to cut carbon emissions from aviation.  In January 2008 the Labour Government launched a consultation on just such a change, but in November that year the then Chancellor Alistair Darling announced that instead of a per-plane duty, APD would be restructured: the tax would be based on four geographical bands set at intervals of 2,000 miles, so that travellers flying farther would pay a higher rate of duty. There would be two rates of duty within each band: a standard rate, and a reduced rate to apply to the lowest class of travel.[3] The new structure took effect from 1 November 2009, despite concerns about the impact of the new system for passengers making long haul flights, particularly those making journeys to the Caribbean.

During the 2010 General Election campaign both the Conservatives and the Liberal Democrats argued for reforming APD. In its first Budget on 22 June 2010 the new Coalition Government stated that it would “explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty.”[4] In the 2011 Budget the Government stated it would not proceed with a per-plane duty “given concerns over the legality and feasibility of this approach”[5] but it would consult on options for simplifying the rate structure as well as proposals to extend the scope of the tax to flights on business jets.[6] It also announced that while it was assumed that the rates of APD should go up each year in line with inflation, duty rates would be frozen for twelve months, with the increase for 2011/12 deferred until April 2012.[7]

In December 2011 the Government confirmed that a new higher rate of duty would apply to business flights from 1 April 2013, but the 4-band structure would be retained.[8]  Duty rates would rise in April 2012, fully reflecting the rise in inflation over the past two years.[9]

Over this period travel organisations and airlines campaigned consistently for APD to be scrapped, though Ministers opposed cutting duty rates or abolishing the tax on grounds of cost.[10] Duty rates were increased in line with inflation for both 2013/14 and 2014/15.[11]

In his 2014 Budget the then Chancellor, George Osborne, announced that from April 2015 the 4-band structure of the tax would be replaced with 2-bands: Band A for short haul flights, and Band B for all long haul flights. Mr Osborne also proposed that the higher rates of duty for flights on private jets would be substantially increased.[12] This reform was estimated to cost £215m in 2015/16, rising to £250m by 2018/19.[13] Subsequently in his Autumn Statement that year the Chancellor announced that APD on economy flights would be scrapped for children in two stages: first, from 1 May 2015 for children under 12, and then from 1 March 2016 for children under 16.[14]

No further changes have been made to the structure of APD since then.

Over the three years 2016-2018 duty rates have been increased in line with inflation. The rounding of APD rates to the nearest £ has meant that the rates on ‘Band A’ short haul flights remained frozen.[15] In the Autumn 2017 Budget Chancellor Philip Hammond announced that for 2019/20 the standard and higher rates on ‘Band B’ long haul flights would be increased, but all other duty rates would be frozen.[16] In his 2018 Budget on 29 October, Mr Hammond announced that for 2020/21 short-haul rates would remain fixed, and long haul flights would be increased in line with inflation.[17] As this constitutes a real terms freeze, the Exchequer impact is estimated to be nil.[18]

Over this period there have also been a number of significant developments with regard to the application of APD across the UK.

Scotland: In 2016 the Government introduced the Scotland Act 2016 to implement the recommendations for the further devolution of powers to the Scottish Parliament made by the Smith Commission in November 2014. As part of this package of measures, it was anticipated that APD would be devolved from April 2018. Over 2016 the Scottish Government consulted on the design of a replacement Scottish Air Departure Tax and confirmed plans to cut this tax by 50% by the end of the next Scottish Parliament, and abolish it completely when resources allowed.[19] However, in October 2017 the Scottish Government announced it would postpone this reform, and to date there is no fixed date for the introduction of the new tax.[20]

Regional airports in England: Regional airports have raised concerns about the potential impact of devolution of APD to Scotland,[21] and in July 2015 the Government consulted on possible options to mitigate these effects – looking at the case for devolving APD, for varying duty rates across England, or providing aid directly to affected airports.[22] However, any of these options would have to comply with EU rules on aviation, State aid and tax devolution. Following the outcome of the EU referendum, in November 2016 the Government confirmed that it would not take specific measures at this point, but would “review this area again after the UK has exited from the EU.”[23]

Northern Ireland: In July 2011 the Northern Ireland Affairs Committee published a report on APD in which it recommended that the tax should be abolished for flights both to and from airports in Northern Ireland, because of competition from airports in the Republic and the threat this posed to one particular transatlantic route.[24] In September that year the Government announced that the rate of APD on direct long haul flights from airports in Northern Ireland would be cut to the short haul rate, and that it would consult on devolving aspects of APD.[25]  In February 2012 the Government confirmed that provision in the upcoming Finance Bill would devolve APD to the Northern Ireland Assembly,[26] and in autumn 2012 the Northern Ireland Executive introduced legislation to abolish APD on direct long haul flights from 1 January 2013.

In 2014 the Irish Government abolished Ireland’s version of APD – the ‘Air Travel Tax’ – and there have been concerns that the tourist industry in Northern Ireland has been particularly affected by this, and by the lower 9% VAT rate in Ireland which applies to a number of tourism related goods and services.[27]  In the Autumn 2017 Budget the Government announced that it would “publish a call for evidence which will consider the impact of VAT and air passenger duty (APD) on tourism in Northern Ireland, to report at Budget 2018.”[28] This consultation was launched on 13 March; this noted that responses to the consultation “will inform future policy development but the government has made no firm decisions about the issues set out in this document.”[29] In the 2018 Budget the Government announced that there would be “no changes to the VAT or APD regimes in Northern Ireland at this time” but that it would “continue to explore ways to support a successful and growing tourism industry.”[30]

This paper looks at the recent debate on taxing aviation, in the context of these developments. Two other Library papers look at the introduction of APD, and the Labour Government’s approach to reforming the tax.[31] HM Revenue & Customs publish guidance on the operation of the tax, and statistical data on its receipts.[32]


[1]     HM Revenue & Customs, Rates for air passenger duty: guidance, May 2018

[2]     Office for Budget Responsibility, Economic and Fiscal Outlook, Cm 9713, October 2018 (Table 4.6)

[3]     HC Deb 24 November 2008 c499; HMT Pre-Budget Report press notice PBR08/2, 24 November 2008

[4]     Budget 2010 HC 61, June 2010 p36

[5]     Budget 2011 HC 836, March 2011 para 1.152-3

[6]     HM Treasury, Reform of Air Passenger Duty: a consultation, March 2011 para 1.4

[7]     HM Treasury, Budget 2011 policy costings, March 2011 p41

[8]     HM Treasury, Reform of Air Passenger Duty: response to consultation, December 2011

[9]     Autumn Statement, Cm 8231 November 2011 para 2.31

[10]    For example, see comments by Treasury Minister David Gauke in an Opposition day debate on APD in October 2013 (HC Deb 23 October 2013 c403).

[11]    Budget 2012 HC 1853, March 2012 para 2.158; Budget 2013 HC 1033, March 2013 para 2.157

[12]    HC Deb 19 March 2014 c787; Budget 2014 HC 1104, March 2014 para 2.160-1

[13]    Budget 2014, HC 1104, March 2014 p57 (Table 2.1 – item 36).

[14]    HC Deb 3 December 2014 c312. This was estimated to cost £45m in 2016/17, and £85m in 2017/18: Budget 2015, HC 1093, March 2015 (Table 2.2 – item c).

[15]    Budget 2016, HC 901, March 2016 para 2.169; Spring Budget 2017, HC 1025, March 2017 para 3.26

[16]    Autumn Budget 2017, HC 587, November 2017 para 3.45. This was projected to raise around £25m a year (op.cit. Table 2.1 – item 12).

[17]    Budget 2018, HC 1629, October 2018 para 3.49

[18]    HMRC, Air Passenger Duty: rates from 1 April 2020 to 31 March 2021, 29 October 2018. Duty rates 2018 to 2020 are set out in HM Treasury, Overview of Tax Legislation and Rates, October 2018 (Annex A).

[19]    Scottish Government, Programme for Government 2015/16, September 2015 (section 3)

[20]    Revenue Scotland, Air departure tax FAQs, June 2018

[21]    see, Transport Committee, Smaller airports, HC 713 of 2014/15, 13 March 2015; and, Westminster Hall debate on regional airports: HC Deb 2 February 2016 cc301-327WH.

[22]    HM Treasury, Discussion paper on options for supporting English regional airports from the impacts of air passenger duty devolution, July 2015

[23]    Autumn Statement, Cm 9362, November 2016 para 4.37  A summary of responses to the discussion paper were published at this time.

[24]    Second report: Air Passenger Duty, 8 July 2011, HC1227 of 2010-12 paras 5, 18-19

[25]    HM Treasury press notice 107/11, 27 September 2011.  HC Deb 19 October 2011 c964W

[26]    HC Deb 21 February 2012 c71WS. Provision to this effect was made by s190 & schedule 23 of Finance Act 2012. Consequential changes were made by Order (SI 2012/3017).

[27]    see, Northern Ireland Affairs Committee, Promoting the tourism industry in Northern Ireland through the tax system, HC 50, 20 March 2018

[28]    Autumn Budget 2017, HC 587, November 2017 para 4.89

[29]    HMT, VAT, Air Passenger Duty and tourism in Northern Ireland: call for evidence, March 2018 para 1.8. see also, PQ136109, 23 April 2018.

[30]    Budget 2018, HC 1629, October 2018 para 4.113

[31]    Air passenger duty: introduction, CBP413, 14 February 2019; and, Air passenger duty: the approach of the Labour Government, CBP6426, 14 February 2019. 

[32]    APD for plane operators, & Exemptions from APD, January 2018; Air Passenger Duty: statistical bulletin, September 2018. For the split of receipts across England, Scotland, Wales & Northern Ireland see, HMRC, Disaggregation of HMRC tax receipts, October 2018.

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