Operational Update: UK Air Passenger Duty Price Changes
Air Passenger Duty (APD) is an excise duty charged by Her Majesty’s Revenue and Customs Agency (HMRC) based on "chargeable" passengers being transported from a UK airport on a qualifying aircraft. The amount of APD you’ll pay is based on the number of chargeable passengers and their destination, with "premium" APD rates charged in some cases. While UK APD is not a new regulation impacting business aircraft operators, there have been recent revisions to the pricing schema which you should be aware of.
The following is an overview of what you need to know:
1. Key points for general aviation operators
APD only applies to aircraft taking off from a UK airport. Aircraft with a Maximum Takeoff Weight (MTOW) below 5,700 kg (12,566 pounds) are exempted from APD requirements. APD charges for General Aviation (GA) aircraft are per passenger, and based on the distance of the flight. GA aircraft between 5,700 kg and 20,000 kg (12,566 and 44,092 lbs.) are subject to the same APD rates as commercial airliners. Aircraft with MTOW more than 20,000 kg (44,092 lbs.) and with fewer than 19 passenger seats pay a higher, premium, APD rate. It’s important to note that APD only applies to passengers. Active crew members are not charged APD, and deadheading crew are also excluded, so long as they carry out required duties within 72 hours of the particular flight.
2. This is a new tax for GA
The UK implemented collection of APD for GA on April 1, 2013, even though the European Union (EU) introduced the legislation back in 2010. While each country in the EU applies and collects this tax in a different way, APD has cost impacts on all GA operations.
3. APD rates are changing for the UK
The HMRC announced that APD rates will increase effective April 1, 2014. APD is based on distance flown, broken down into different bands, from 0 to over 6,000 miles, and tax costs for all rate bands are going up. It’s important to consider these new APD rates for all future payments made to HMRC. The following is an overview of recent rate changes:
(lowest class of travel)
|Standard rate||Higher rate|
|From 1 April 2013||From 1 April 2014||From 1 April 2013||From 1 April 2014||From 1 April 2013||From 1 April 2014|
In addition to the rate changes above, please note that as of January 1, 2013, rates for direct long flights from Northern Ireland were given to the Northern Ireland Assembly and set to a cost of 0. A direct long haul from Northern Ireland is defined as:
- Starting from Northern Ireland
- The first part of the flight is outside of Band A
For any flight, if seat pitch exceeds 40 inches (1.016 meters), the standard rate will be the minimum rate that applies. Premium rates will be applicable to all chargeable passengers onboard aircraft of 20,000 kg or more with fewer than 19 seats.
4. APD registration requirements
Operators with qualifying flights must register with HMRC for APD accounting and collection, except for "Occasional operators" – defined as having no more than 12 flights from the UK per year with annual APD liability of no more than 5,000 lbs – who are permitted to forego normal registration requirements if APD payments are made within seven days of a chargeable flight. If an operator is eligible for the Occasional Operators Scheme, he or she may complete a combined registration and payment via an HMRC form and submit it along with required payment within seven days. This form fulfills the registration requirement, and no other action is necessary. Another option is the "Annual Accounting Scheme" whereby operators with less than 500,000 pounds in annual APD liability can arrange to make payments on an annual, semi-annual, or monthly basis. Registration for APD is also required in order to participate in the Annual Accounting Scheme.
5. Penalties for not complying
Operators may be liable for penalties if registration of applicable charges is not completed, if the payment isn’t made by the due date, or if there are inaccuracies in returns or documents sent to HMRC. It’s important to note that if payment is made electronically, an additional seven calendar days will be allowed to complete the payment.
6. 3rd-party providers can assist
When registering with HMRC for the UK APD, you’ll need to appoint a UK fiscal representative. As not all GA operators traveling to the UK have a UK fiscal representative, it’s best to arrange to have a 3rd-party provider make APD payments on the operator’s behalf.
7. Additional reading
For more information on UK APD, please read our blog article titled "UK Air Passenger Duty (UK APD) – How It Applies to UK Business Aviation."
New APD rates can have a significant cost impact on GA operators who frequently fly to/from the UK. APD rates for an aircraft between 5,700 and 20,000 kg can range from 13 to 97£ per passenger. For aircraft above 20,000 kg, potential APD charges can range between 52 and 388£ per passenger. It’s recommended that operators discuss UK APD cost impacts and excise tax payment options with their 3rd-party provider.
If you have any questions about this blog article or would like assistance in arranging payment of UK APD, please contact me at email@example.com.