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HM Customs and Excise C&E 4

21 March 2000

AIR PASSENGER DUTY SLASHED FOR MOST TRAVELLERS

A new fairer structure for Air Passenger Duty was announced by the Chancellor today, at a revenue cost to the Exchequer of £80 million in 2001/02.

Duty on economy flights within the European Economic Area (EEA) will be halved from £10 to £5 from April next year. On top of this, there will no longer be any duty to pay on flights from airports in the Scottish Highlands and Islands.

Part of the cost of these changes will be met by removing the duty exemption for return flights within the UK in order to comply with European law.

After all these changes, duty on all economy flights from the UK to other parts of the EEA will be halved to £5. Duty on single flights within the UK will be halved to £5. There will be no change in duty on return flights within the UK, and even lower rates on flights from the Scottish Highlands and Islands.

The standard rates for those travelling first or club class will remain at the current £10 for destinations in the EEA and will rise to £40 to other destinations. These changes will make the duty fairer by bringing the rate of duty more in line with the cost of travel.

The changes will come into effect from 1 April 2001, to allow airlines and tour operators plenty of time to adjust their marketing and pricing strategies to the new structure.

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DETAILS

The changes announced today will:

• introduce new reduced rates of duty for economy fares of £5 for flights to EEA countries and £20 to other countries. The standard rates will be £10 for flights to EEA countries and £40 to other countries. This structure will make the duty fairer;

• exempt from duty flights from airports in the Scottish Highlands and Islands. This exemption has been introduced in recognition of the remoteness of this region and its dependence on air travel as part of everyday life; and

• remove the exemption from duty for the return leg of a flight within the UK. This exemption, introduced under the last Government, must be removed to ensure compliance with European Treaty obligations.

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NOTES FOR EDITORS

1. At present, air passenger duty is payable by airlines on the number of passengers on board a plane on departure from a UK airport. The rate is £10 per head if the flight is a domestic one or to a destination within the EEA or £20 where the destination is elsewhere.

2. On return flights within the UK, there is an exemption from duty for the return leg. However, that exemption has been found to be incompatible with European law, and, in order to comply with European Treaty obligations, the Government has had to amend domestic law.

3. Air passenger duty receipts for the year 1998/99 were £837 million.

4. Details for businesses are available in Budget Notice 49/2000 which is available from Customs and Excise Advice Centres and from the Customs and Excise Internet site.

Press enquiries only to HM Customs and Excise, Communications Division, New King’s Beam House, 22 Upper Ground, London SE1 9PJ.

Telephone:  020 7 865 5471/5472.

Others should contact the Aviation Sector Centre of Expertise on 01895 842226 (fax: 01895 814305).

Customs and Excise Internet address: 

http://www.hmce.gov.uk

This news release can also be found at :

http://www.hm-treasury.gov.uk

Other Treasury material can also be found at this address.

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