This note lists a series of key documents on taxation.
Documents to download
Air passenger duty: recent debates & reform (730 KB , PDF)
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. APD raised £3.7 billion in 2019/20.
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. 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.” 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” 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. 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.
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. Duty rates would rise in April 2012, fully reflecting the rise in inflation over the past two years.
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. Duty rates were increased in line with inflation for both 2013/14 and 2014/15.
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. This reform was estimated to cost £215m in 2015/16, rising to £250m by 2018/19. 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.
Since these reforms no further changes have been made to the structure of APD, and duty rates have generally been increased in line with inflation.
First, for 2016-2018 duty rates were increased in line with inflation, although the rounding of APD rates to the nearest £ has meant that the rates on ‘Band A’ short haul flights have remained frozen over the whole period.
In the Autumn 2017 Budget the then Chancellor Philip Hammond announced that for 2019/20 the standard and higher rates on ‘Band B’ long haul flights would be increased, though other duty rates would be frozen.16F In his 2018 Budget Mr Hammond announced that for 2020/21 short-haul rates would remain fixed, while rates on long haul flights would be increased in line with inflation.17F Subsequently the Chancellor Rishi Sunak has announced inflation-only increases in duty rates for both 2021/22 and 2022/23.18F
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. 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.
Regional airports in England: Regional airports have raised concerns about the potential impact of devolution of APD to Scotland, 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. 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.”
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. 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. In February 2012 the Government confirmed that provision in the upcoming Finance Bill would devolve APD to the Northern Ireland Assembly, 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. 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.” This consultation was launched in March 2018. 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.” 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.”
Finally, in the 2020 Budget the Government announced that it would consult on reforming the taxation of aviation. This consultation was postponed until March 2021 – one of a number of tax consultations deferred in response to the impact of the Covid-19 pandemic. The consultation document sets out the Government’s current approach to taxing the aviation sector, via APD, before going on to seek views on the Government’s initial position that the effective rate of APD on domestic flights should be reduced. It also seeks views on a potential increase to the number of distance bands, in order to align the tax more closely with the government’s environmental objectives and to help fund any reduction in domestic APD.
The consultation closed on 15 June. In answer to a PQ on 1 July Treasury Minister Kemi Badenoch confirmed that, “the Government is currently reviewing responses and will update in due course.”
This briefing discusses the debate there has been on the right approach to taxing aviation, in the context of these developments. Two other Commons Library briefings look at the introduction of APD, and the Labour Government’s approach to reforming the tax.
 Office for Budget Responsibility, Economic & Fiscal Outlook, CP 387, March 2021 (Table 3.4). Receipts fell sharply with the impact of Covid-19 to £0.6bn in 2020/21. They are forecast to rise steadily over the next three years from £1.3bn in 2021/22 to £3.1bn by 2023/24.
 HM Treasury, Reform of Air Passenger Duty: response to consultation, December 2011
 Autumn Statement, Cm 8231 November 2011 para 2.31
 Budget 2014, HC 1104, March 2014 p57 (Table 2.1 – item 36).
 HMRC, Historic rates for Air Passenger Duty, updated 1 April 2021; HMRC, Air Passenger Duty rates from 1 April 2022 to 31 March 2023, 3 March 2021
 Autumn Statement, Cm 9362, November 2016 para 4.37. A summary of responses to the discussion paper were published at this time.
 Second report: Air Passenger Duty, 8 July 2011, HC1227 of 2010-12 paras 5, 18-19
 HM Treasury press notice 107/11, 27 September 2011. HC Deb 19 October 2011 c964W
 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).
 see, Northern Ireland Affairs Committee, Promoting the tourism industry in Northern Ireland through the tax system, HC 50, 20 March 2018
 HMT, VAT, Air Passenger Duty and tourism in Northern Ireland: call for evidence, March 2018 para 1.8. see also, PQ136109, 23 April 2018.
 Air passenger duty: introduction, CBP413, 14 February 2019; and, Air passenger duty: the approach of the Labour Government (2007-10), CBP6426, 14 February 2019.
Documents to download
Air passenger duty: recent debates & reform (730 KB , PDF)
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