HM Customs and Excise 3 - 9 November 1999

CHANGES TO AIR PASSENGER DUTY

The Government today announced changes to Air Passenger Duty (APD) to be introduced in the next Budget:

The current exemption for the return leg of a journey within the UK will be replaced by a new reduced rate structure for lower cost flights. In the pre-Budget period Customs and Excise will consult on details;

There will also be consultation on an exemption for flights from airports in the Scottish Highlands and Islands from APD - in recognition of the reliance on air transport in this remote region.

These changes will be made on a revenue-neutral basis.

NOTES FOR EDITORS

1. Air Passenger Duty (APD) was introduced in November 1994. It is payable by airlines on each passenger they carry from a UK airport. There are currently two rates of duty:

- £10 per passenger on flights from within the UK to European Economic Area (EEA) destinations. Return legs of round-trip flights within the UK are exempt; and

- £20 per passenger for departures to all other destinations.

2. This duty structure is legally defective because it does not provide the same effective tax treatment for all return journeys within the European Economic Area. The Government will in the next Budget replace the return leg exemption with a reduced rate structure.

3. The Government also recognizes the importance of air transport to the most remote areas of the UK. Customs and Excise will, therefore, also consult on introducing an exemption from air passenger duty for flights from airports in the Scottish Highlands and Islands as part of the restructuring of the air passenger duty.

4. This package of reforms will be introduced on a revenue-neutral basis.