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Air Passenger Duty shaken up in the Budget – are you a winner or a loser?

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Rishi Sunak, the chancellor, has just announced that Air Passenger Duty will rise even further for the longest international flights as he unveils the annual budget for the country. It isn’t all bad news though.

In case you weren’t already aware, Air Passenger Duty is already the world’s highest tax on flights, adding between £13 and £180 when departing the UK, depending on the distance and class of travel. The tax only applies to U.K. departures which, for domestic flights, means you are paying APD twice.

The top rate from 1st April 2023 will be £200.

uk budget air passenger duty changes

The level of domestic Air Passenger Duty has become a political issue. When Flybe failed, one reason it gave was that the level of APD – £26 on a return domestic economy flight – was wrecking its economics.

It has also became a football in the UK ‘levelling up’ agenda. With most European countries not having any similar taxes, or not at the same level, it can be cheaper to fly to Munich than Manchester. You would only be paying the £13 economy Air Passenger Duty on the outbound flight rather than on both legs.

What are the current charges?

Whilst APD, which was introduced in 1994, was originally marketed as a green tax that would reduce carbon dioxide emissions, in reality it has just lined the treasury’s coffers. The money raised from APD is not ring-fenced on spending to reduce aviation CO2 emissions or otherwise make flying more eco-friendly.

The treasury even admitted this in a 2011 consultation:

“Air passenger duty is primarily a revenue raising duty which makes an important contribution to the public finances, whilst also giving rise to secondary environmental benefits.”

Air Passenger Duty, as well as Heathrow’s high Passenger Service charges, make the UK one of the most expensive places to fly from. It is one of the reasons we often recommend flying from Inverness, which is free of APD, or Europe first.

The current rates, which came in on 1st April 2021, are as follows:

Air Passenger Duty Cheapest cabinOther cabins
Band A (0 – 2,000 miles)£13£26
Band B (Over 2,000 miles)£82£180

From 1st April 2022 it will increase, as announced in the last budget, to:

Air Passenger Duty Cheapest cabinOther cabins
Band A (0 – 2,000 miles)£13£26
Band B (Over 2,000 miles)£84£185

Today’s announcement covered the increase from 1st April 2023.

APD rates are set to increase – or decrease – or stay the same ….

A rise in APD has been mooted for some time. A consultation earlier this year suggested that the government was looking at increasing APD for longer flights in order to fund a reduction in APD for domestic flying.

Today’s Budget makes it clear that this will be implemented, with the new rates taking effect on 1st April 2023.

Here are the new Air Passenger Duty rates:

New Air Passenger Duty rates

Domestic flights will get cheaper

Let’s start with the good news. Domestic flights between England, Scotland, Wales and Northern Ireland will be subject to lower taxes.

These flights will have their APD cut in half, which essentially means the previous ‘doubling up’ of APD has been eliminated. You will now pay £13 in Air Passenger Duty on a return flight, or £6.50 one-way.

It is not clear if the Channel Islands and Isle of Man are included in the definition of ‘domestic’. I am assuming not, because the chart above says it covers only the ‘UK’.

Ultra long-haul flights will get more expensive

To compensate for the domestic cut a new ultra long-haul band is being introduced for flights over 5,500 miles.

That includes flights to Southern Africa, parts of South America (although not Brazil), the Far East and Australia Pacific regions. Flights to the USA, the Middle East and the majority of Africa are unaffected.

Here is a map from the government consulation. The new ultra long-haul band is in red:

UK apd bands

(APD bands are calculated from London to the national capital. That’s unfortunate for Mexico ….)

Economy passengers will pay an APD rate of £91 on these flights which is just £4 higher than a standard long-haul flight from the same date.

Passengers in other classes will pay £200. This is just £9 higher than the 2023 standard long-haul rate, which makes you wonder why the Government bothered. The extra money raised will be minimal.

The new APD rates are actually worse for the environment

Somewhat ironically, the new rates will actually be worse for the environment, despite APD being sold as having green credentials.

By reducing domestic APD, the government is actually incentivising domestic air travel over other, more environmentally friendly forms of transport. Taking a flight from (for example) London to Edinburgh will now be cheaper, and more competitive, than taking the train.

Of course, there are many domestic routes where no decent public transport links exist. On these routes a reduction in taxes will be welcomed by those who have to make those journeys on a regular basis and don’t have decent alternatives.

These are few and far between, however – the vast majority of domestic seats are available on trunk routes such as those between London and Edinburgh, and according to Cirium over 40% of UK domestic flights are to or from London airports. The proportion of region-to-region flying is much smaller.

Conclusion

With a new top-rate which will be only marginally higher than the standard long-haul rate, most HfP readers are likely to come out ahead. The saving on one domestic return flight each year will be higher than the extra cost of one trip to Asia or Latin America.

Remember that these changes do not come into effect until 1st April 2023. This is 18 months away.

Comments (172)

  • Rose says:

    Bet lots of readers voted for this party as well

    • Axel says:

      Yes, I’m all in favour of the HFP parties but they are usually in London around Camden which doesn’t suit me

    • AJA says:

      Do you think the party you’re in favour of would have done anything differently? If so what would they have done?

      APD is revenue raising for the government whatever the colour of the rosette. In a budget taxes usually rise for the majority of people, or rise spectacularly for certain people so that the revenue can be spent on others. Overall these increases are not huge, they’re near enough inflation. The new band is more and will impact those travelling over 5,500 miles. If you can afford to travel upfront in J or F on a journey of that distance you can afford to swallow these increases. If you can’t afford it then don’t fly which is what Greta wants. You can of course do the same as she did and hitch a ride on a boat, not.

    • kk says:

      tax party lol

  • Mike says:

    The problem with this train for domestic journeys being pushed is the train to Heathrow to catch an international flight bit. The hippies may talk about muh green, but really what’s happening is London based green charities, green NGOs, pundit and virtue signalling middles class sniffing their own farts want everyone outside London to have to struggle and spend extra time dragging their luggage down to London (yes, I’m well aware of some trialling of dropping off the luggage at the railway stations on the continent). What would be better would be incentives for a quicker move to electric planes for these short domestic routes.

    If this was really a green agenda, how about banning all flights out of London and its congested skies. People in London can get a train to Manchester or Birmingham to catch a flight. I wonder if that would ‘fly’ as an idea?

    • PGW says:

      Gatwick isn’t much better either. 30 years ago it was possible to catch a direct train from the North of England straight to the airport. That service is long gone so connecting through the main London termini remains a very unattractive alternative.

      • Lev441 says:

        Out of interest, which route was that? How did it get though London? (Assuming it went via London?)

        • John says:

          Kensington Olympia

          • SteveW says:

            You can certainly get to Peterborough from Horsham and Crawley on the same train nowadays. Possibly further, don’t know without checking but you could certainly avoid the London scrum if you changed at P.

      • Anna says:

        I got a train from Preston to MAN once. My train was cancelled so they merged 2 services and I spent the journey crushed in the aisle with my wheely case between my feet as there was literally nowhere else for it to go. Not sure what I’d have done if I was on my way to LHR or LGW with 2 x 32 kg plus hand luggage!

    • Anna says:

      Fantastic idea. Everyone should have to contend with MAN security staff.

      • Mike says:

        It’s just pointing out the hypocrisy of London based media luvvies and green hypocrites. Traveling to Manchester for flights is just as reasonable as everyone else in the country having to travel to London.

        Also, if we are being green, since up to a quarter of the fuel an aircraft burns is whilst it’s on the ground then airports with less congestion would be greener (planes aren’t efficient ground transportation). Goodbye Heathrow, hello Manchester/Leeds/Birmingham.

    • iceman says:

      that’s all due to the failure of the government to connect the airport properly. actually, it can easily be solved – transit flights = APD waiver. except the government is too lazy to even do it.

      now, Lon-EDI cause twice the pollution of Lhr-FRA but is only taxed once. wtf? all you need to do is to look at boris johnson’s virtue signalling and can tell everyone he spouts out is doing harm to the country.

  • Joe H says:

    Forgive my ignorance, but will the extra charges be added to 2022 flights already booked and paid for? or is the price locked if you’ve already paid?

    • Joseph H says:

      Ignore – I see the changes take effect in 2023. Mods – please delete my reply. Thanks.

    • Rob says:

      Airline has the right to ask but unless it is a lot probably won’t.

      • Blenz101 says:

        I recall last time there was a significant increase Virgin did collect it at check in.

  • BA-Flyer says:

    If I try and search INV to , I get an error that BA don’t fly the route. If I search each leg separately, the taxes & APD are no better than starting from LHR. Is there a way to check the saving of starting from INV? Or do you just manually subtract APD yourself and that’s what BA will charge?

  • Joe says:

    Is Russia split up in the map or am I reading it wrong?

    • ChrisC says:

      IIRC and I’ve not re-read the APD HMRC documents in sometime (and no intention of doing so) Russia is split between east and west of the Urals

    • Yan says:

      bizarre enough to trigger a diplomatic spat…China just lost Hainan on top of Taiwan, Hong Kong and Macau

      • QFFlyer says:

        Haha I noticed Hainan was coloured separately too

      • John says:

        Are Taiwan and/or HK actually treated as a different country for APD purposes? What is the capital of “East Russia”?

        • David Safir says:

          As Hong Kong is a SAR of China, presumably the <5,500 miles between captals London and Beijing lets them off the hook.

  • Can says:

    Taking the risk of sounding like a hippie: I was naively looking forward to some hope that one day we’ll talk about train station lounges and loyalty miles for trains.

    Do they really think that domestic tax cut will make any difference to anything from a customer’s view point?!?

    • Chris L says:

      If only. But why would a UK train operating company bother with anything more than a token loyalty scheme? 90% of the time, the consumer has little or no choice of which train operator to use. The system of franchised routes essentially removes the competitive element and gives the companies no incentive to deliver anything more than the bare minimum service levels.

      • Can says:

        Sure, the problem is deeper. the way that the routes are franchised gives no incentive to the customer. But, airline miles are not that different. Apart from the Continent, there are very few direct alternatives and I am sure most customers do not choose the loyalty over saving even £50.
        In my understanding, miles give you a bit of a discount or leisure option if you are frequent traveller. Same for the trains.
        There, the alternative could be between trains and driving, perhaps — only if this country had fast and affordable trains, of course..

        • Dubious says:

          I suppose one of the issues historically has been the way ticket revenue is shared between different train operating companies, based on estimated passnger demand for each service. Except for Super Advance Tickets that are restricted to a specific service by a specific train company, or routes that only have a single train company, there is no way to know for sure which train company carried the passenger and should get what share of the ticket revenue.

          There also seems to be lack of creativity in the train operating company sector that has focused it’s attention on getting more passengers to travel for leisure (during the off-peak times), albeit at the same time as redefining the definition of peak so that they can grab higher fares.

          To make a frequent traveller scheme viaable, there would need to be more to differentiate between travel classes and probably an element of inventory control could help…the ‘off-peak or anytime’ travel restrictions are not very granular and the need to recognise tickets (and share revenue) across multiple train companies also complicates the incentivsation of passengers into using specific train services.

          The introduction of super-advance tickets that are locked-in to a specific train operating company and a specific schedule means there is now some element of constraint that could be used to influence passenger behaviour in a more refined manner. With constraints comes the opportunity of offer flexbility as a premium service. For example, what if a train company could offer a frequent-traveller status that gave annual ‘upgrade vouchers’ to use an off-peak ticket during peak time or a super-advanced ticket on any service? or recognising the use of Standard tickets within the ‘First’ section.

          However I doubt there is enough incremental gain to justify the operation of a loyalty scheme until i) the way the revenue is approptioned between operators changes AND ii) there are more train operators to choose from on the same routes.

          • Can says:

            Is it too dreamy to ask for something like Eurostar miles domestically or something like Thalys here in the UK. Oddly there is the infamous Pullman and the new Edinburgh London train, so there is some potential.
            Revenue sharing is a mess. I agree. The whole picture is shaped around commuters, which is a major (but understandable) mistake.

          • BuildBackBetter says:

            @Can, because commuters are the only reliable customers for trains.
            How many families take trains nowadays?
            People look at the wrong mode of travel. Cars are the most preferred, cheapest and probably as polluting as flights.

          • John says:

            Eurostar and Thalys have loyalty schemes because they like to pretend they are airlines on bogies.

      • John says:

        Franchising has ended though, it will just be GBR soon

    • Muzer says:

      Perhaps under GBR they will. I’m hoping we get a nice joined-up railway in the near future when the franchises turn into management contracts and an arms-length body is in charge of letting them rather than the DfT itself.

      Station lounges do already exist by the way; but they’re currently run by individual operators and usually only valid if you have a first class ticket valid for imminent travel by that operator.

  • Dave says:

    £200 is the premium rate. Detail of this is hidden in HMRC ‘OOTLAR’ not in the Red Book.

  • Jonathan says:

    For flights to Mexico, for a lot of us, it’s generally easier to via the US/Canada

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