UK APD & Upcoming 2015 Changes: Part 1 – APD Basics

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UK APD & Upcoming 2015 Changes: Part 1 – APD Basics

UK APD & Upcoming 2015 Changes: Part 1 – APD Basics

This is part one of a two-article series on the latest information pertaining to the UK APD charges.

UK Air Passenger Duty (APD) was extended to General Aviation (GA) in April 2013 following its earlier introduction to commercial aviation in 1994. It is calculated based on distance flown and seat pitch, with higher rates imposed for aircraft with 1) a Maximum Takeoff Weight (MTOW) of 44,092 lbs. (20 tons / 20,000 kg) or more and 2) configured to seat 19 people or fewer.

The following is an overview of what you need to know:

1. APD and GA

APD is an excise duty levied on the carriage of chargeable passengers on any chargeable aircraft taking off from a UK airport, with the exception of some exempt airports in the Highlands and islands of Scotland. It is a legal requirement to pay APD.

The amount of APD due is based on the number of chargeable passengers that boarded the aircraft, their destination, and the class of travel.

2. UK APD basics

Her Majesty’s Revenue and Customs (HMRC) notice 550 outlines the UK APD requirements, as well as applicable charges that will be in force until changes that will come into effect in April 2015. UK APD is a self-assessed and self-declared tax. Operators are responsible for determining what their mandated UK APD charges are and for paying these charges directly to HMRC or through an approved, appointed APD administrator.

Operators that depart more than 12 times a year or incur APD liability of more than £5,000 must register with HMRC and are required to appoint a UK-based fiscal or admin representative. Registration is done via form APD1 which can be downloaded from the HMRC website. Those operators that depart from UK airports no more than 12 times a year with an APD liability of no more than £5,000 may use the occasional operators’ scheme and are not required to register with HMRC.

3. APD applies to departing passengers

UK APD is applicable to every domestic and international departure from the UK. These charges, however, apply only to passengers who board aircraft in the UK and not crew members. If you’re making an international tech stop in the UK, APD is not chargeable on the transiting passengers (unless that tech stop is for more than two hours) but is due on only those that board the aircraft in the UK. Humanitarian and air ambulance GA passengers are exempt from UK APD.

4. Current UK APD charges

UK APD is not chargeable to aircraft with MTOW under 12,566 lbs. (5.7 tons / 5,700 kg). A reduced rate of APD is applied to aircraft if the seat pitch is 40 inches or less; otherwise, the standard rate applies. However, passengers on business aircraft over 44,092 lbs. (20 tons / 20,000 kg), and with fewer than 19 seats, are subject to much higher APD rates.

APD rates also vary based on distance flown. Through April 1, 2015, there are four rate bands: Band A: 0-2,000 miles; Band B: 2,001-4,000 miles; Band C: 4,001-6,000 miles; and Band D: over 6,000 miles.

APD rates
Bands
(approximate distance in miles from the UK)
Reduced rate
(lowest class of travel)
Standard rate
(other than the lowest class of travel)
Higher rate
From 1 April 2013From 1 April 2014From 1 April 2013From 1 April 2014From 1 April 2013From 1 April 2014
Band A
(0-2,000 miles)
£13£13£26£26£52£52
Band B
(2,001-4,000 miles)
£67£69£134£138£268£276
Band C
(4,001-6,000 miles)
£83£85£166£170£332£340
Band D
(over 6,000 miles)
£94£97£188£194£376£388

 

From April 1, 2015
Bands
(approximate distance in miles from the UK)
Reduced rate
(lowest class of travel)
Standard rate
(other than the lowest class of travel)
Higher rate
Band A
(0-2,000 miles)
£13£26£78
Band B
(over 2,000 miles)
£71£142£426

 

5. GA issues

While some may consider it fair that business aviation passengers be subject to APD because commercial passengers are, the charging process is weighed particularly high for GA in contrast to what scheduled commercial airline passengers pay. UK APD charges were increased in 2014, with another increase due in 2015. The UK is just one of five European countries that levy a passenger departure tax.

The British Business and General Aviation Association (BBGA) has challenged upcoming APD increases, but the UK government has indicated that higher rates for GA are intentional and will remain in effect.

6. Regulatory changes

In April 2014 inflation-linked price adjustments were applied to the APD operating bands. However, UK government proposals for a simplified APD charging process will result in increases for most business aviation operators come April 1, 2015.

The current four bands – A to D – will be reduced to just two: A and B. Band A: 0-2,000 miles and Band B: over 2,001 miles. Band B will see significant increases applied to the higher rate category.

Many operators will experience APD increases of over 50%. APD rate per passenger increases from the current £276 to £426. The new bands and prices are notated on the last page of the Air passenger duty: recent debates and reform document from the House of Commons.

Conclusion

At this point in time, it appears that proposed UK APD increases for 2015 are here to stay. Despite lobbying by BBGA and other industry groups, the UK government has confirmed its intention to go ahead with the proposed changes.

Questions?

If you have any questions about this article or would like assistance with the UK APD, please contact me at seanraftery@universalaviation.aero.

Stay tuned for Part 2, where we will discuss payment and compliance issues regarding UK APD.

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