Air passenger duty soars to £3.85bn

Air passenger duty soars to £3.85bn

Jul 10, 2024

The aviation sector has bounced back after huge setbacks through the pandemic as the total receipts from air passenger duty (APD) return to pre-pandemic levels

Total receipts from passenger tax have hit £3.85bn, up by £664m in 2023-24, a climb of 21% compared to the previous year.

For the April to May period this year, already the total APD receipts are up to £635m, a significant increase of £58m compared to the same period the previous year.

This is set to increase further as business and first-class travellers are having to pay higher air passenger duty from April 2025. This was announced at the Budget in March by the Chancellor and is expected to bring in an extra £110m in the 2025-26 tax year. For the majority of passengers travelling in economy class seats on domestic and short-haul flights, the rates will remain frozen.

For the final quarter of 2023-24, APD receipts were £890m, over double the £409m taken in the same quarter of 2021-22, and £116m higher than the final quarter of 2022-23, showing consumers are returning to pre-pandemic levels of travelling.

APD is charged in different bands depending on the distance travelled by the plane leaving the UK, and what class the passenger is flying in. There are currently four destination bands and three rates of duty for each destination band.

Before the pandemic APD receipts had been steadily climbing, bar the 2015-16 tax year when there was a slight drop off. By the 2019-20 tax year, they had risen to almost £3.6bn, plummeting to below £1bn as a result of the pandemic.

The Association of British Travel Agents (ABTA) warned in a pre-election briefing that ‘the UK government should be mindful of further limiting the competitiveness of UK aviation through future increases in APD, avoid additional layering of other carbon charges, taxes and levies, and also seek to remove anomalies in the existing APD regime – such as the treatment of children and premium economy’.