Flying and Environmental Taxation No 1 - Air Passenger Duty

As a general rule a governemnt endeavours to wider the tax base. In recent years environmental taxation has come to the fore a widening part of the UK tax base. This post briefly examines the nature of air passenger duty (APD). It is an important environmental or "green" tax concerning those flying to overseas destinations from the UK.

APD was introduced by the Finance Act 1994 (as amended) - see sections 28 to 44 and schedules 5A and 6. In addition a hotch-potch of statutory instruments in the form of regulations and orders help to bewilder the seeker of truth!

In essence, the tax applies according to the individual passenger's destination and the class of travel. IN effect there are a) four destination bands; and, b) two rates for each band.

The tax is not an insignificant cost on relatively long distance flights. At least three impacts may be identified:

• the passenger traffic is likely to be diverted to other modes of transport as prices increase;
• some destinations are no longer attractive for discretionary flying (tourists);
• avoidance may be attempted by seeking any lower or nil tax regimes - so flying from other countries.

The attached link is useful http://www.travel-rants.com/2011/11/30/air-passenger-duty/