Thanks to the 2014 Budget, we can now save money when we drink beer, play bingo and we can even invest these savings (or at least up to £15,000) on a new cash ISA. But this is not all – hopefully we will be able to have cheaper holidays to long-haul destinations soon. The Chancellor has reduced the air passenger duty we will be paying from April 2015.
Air passenger duty was introduced in 1994 and since then, it has increased significantly. It started as a flat rate of £5 for domestic and European Union destinations and £10 for flights everywhere else. In 2009, four bands of air passenger rates were introduced, depending on the distance from the city of London to the capital city of the country of destination. Different rates will also apply subject to the class of travel you choose – the lowest rate being for economy seats, the standard rates for a business/first class seat and the highest rate would apply, for example, if you decide to fly on a private jet with capacity of fewer than 19 passengers. Children under the age of two are exempt from paying the duty, but you most likely will need to pay at a rate which would vary from £13 to £388.
A family of four travelling on holiday to Spain or Italy in economy seats will currently pay an extra £52 towards this duty. If they decide to fly to Singapore instead, the amount they would have to pay increases to £388 or an astonishing £776 if they decide to splash out on business class tickets.
Air passenger duty has always been very controversial and there has been a lot of criticism, in particular from the aviation and travel industry. Campaigns have been in place for a long time trying to convince the government of its inadequacy, as the rates are the highest in Europe. It is clear that this duty does affect businesses and individuals alike. Not only has it made holidays more expensive, but also it has not helped the recovery of the UK’s economy. No doubt it penalises UK exporters who are trying to enter emerging economies such as China and Brazil.
Surely it can be seen that the first step towards total abolition has been the government deciding to scrap the two highest bands (band C and D). This would mean that the rate for flights travelling over 4,000 miles will be reduced from April 2015, with a saving of £112 or £224 for the above family of four travelling to Spain/Italy or Singapore respectively (at the reduced rate). The saving should contribute to increase the confidence of holidaymakers and exporters and provide a grain of sand to the recovery and growth of the economy.
To assist you to calculate how much you are actually paying towards this duty, the current reduced and standard rates, together with the new ones from April 2015, are below:
Bands (approximate distance in miles for the UK)
Reduced rate (i.e. Economy class)
Standard rate (i.e. Business/First class)
|Rate from 1 April 2014||Rate from 1 April 2015||Rate from 1 April 2014||Rate from 1 April 2015|
|Band A (0-2000 miles)||£13||£13||£26||£26|
|Band B (2001-4000* miles)||£69||£71||£138||£142|
|Band C (4001-6000 miles)||£85||Abolished||£170||Abolished|
|Band D (over 6000)||£97||Abolished||£194||Abolished|
|*from April 2015 this will include all long-haul flights currently in band C or D|