How will the UK budget impact travellers?

In this year’s Spring Budget announcement, Chancellor Jeremy Hunt announced a new tax that will directly impact travellers in the UK. The Air Passenger Duty tax (APD) has been in place since the mid-Nineties and will now be increased in line with inflation. This means that passengers on UK outbound flights will need to pay more if they want to go on holiday.

What is Air Passenger Duty?

APD is a tax levied on “every passenger who flies from the UK”, according to the Government website. The cost is typically included in the final ticket price, so passengers rarely need to worry about paying it separately. “The amount of APD the airline pays depends on how far away your destination is and the class you travel in,” explains GovUK. “On commercial passenger flights the duty costs from £6.50 to £200 per flight. There are higher charges for some private passenger planes or charters.”

How is Air Passenger Duty calculated?

The tax is split into four different bands, and the amount you pay is determined by which band your ticket falls into:

• Domestic flights
• International flights between 0 and 2,000 miles (band A)
• International flights between 2,001 miles and 5,500 miles (band B)
• International flights with distances over 5,500 miles (band C)

The Times explains that there are also three different rates within each band: a reduced rate (typically for economy seats), a standard rate (e.g., premium economy), and a higher rate (first class).

When will the new rule come into effect?

The new tax increase will start on Monday, 1 April 2024.

What will the new APD rates be?

According to The Times, From Monday, 1 April 2024, the APD rates will be:

• Domestic: reduced rate £7, standard rate £14, higher rate £78
• Band A: reduced rate £13, standard rate £26, higher rate £78
• Band B: reduced rate £88, standard rate £194, higher rate £581
• Band C: reduced rate £92, standard rate £202, higher rate £607

What else do we need to know about APD in the budget?

Hunt has proposed an even bigger increase to APD for the tax year 2025-2026, pitching that short-haul flights should increase by £2 per seat and long-haul flights to rise by 11 per cent, Time Out reports.

Does everyone need to pay APD?

APD is assigned to the airline to pay, and the airline attaches the cost of the tax to each passenger’s ticket price. Most passengers must pay APD, with a few exceptions. These include children under 16 flying in economy, children under two without a seat, passengers travelling for humanitarian reasons, sightseeing flights under 60 minutes, and flights between small UK islands (e.g. the Shetland Islands).

What has the response been like?

Unsurprisingly, airlines are not best pleased with the budget news. Talking to The National, Nigel Milton said the budget was a “missed opportunity” from the government to support British businesses. “Instead of firing up the engines so British businesses can compete internationally, we risk falling behind as our competitors race ahead,” he says. He accuses the government of hampering the industry’s attempts at making aviation more green and discouraging travellers from supporting UK airlines. Other big figures in the industry agree, including chief executive of the Business Travel Association Clive Wratten and Tim Alderslade, chief executive of Airlines UK.