- APD is estimated to cost £150 per household annually, according to OBR data
- The tax year 2024-25 is forecast to raise £4.5 billion in revenue for the government
- 90% OF APD receipts are generated by travel in standard and lower classes
- APD will rise again in April 2025
When planning a holiday, most of us focus on the exciting aspects such as choosing the destination, booking flights, and arranging accommodations. However, Ridgefield Consulting, an Oxfordshire-based accountancy firm, reveals a hidden tax that many are unaware of: the UK Air Passenger Duty (APD).
A significant portion of holiday expenses is often discreetly hidden among various charges like checking in luggage and seat selection, which silently add up. One commonly overlooked cost is the APD, initially implemented to reduce environmental impact but now a substantial source of government revenue. With planned increases in 2025, it’s crucial to understand how this often-overlooked charge will affect your travel budget. The rates for the tax year 2024 to 2025 will increase in line with the Retail Price Index (RPI) as forecast in the Spring Budget 2023, meaning a rise in cost for future holidays.
What is air duty?
Air Passenger Duty (APD) is a tax levied on passengers flying from UK airports. Unique to the UK, APD is charged on the majority of flights to raise government revenue and encourage environmental consideration. Similar taxes exist in other countries, such as the ticket tax in the United States. APD remains controversial, with debates on whether it is a green tax or merely an easy revenue source for public spending. Airlines are responsible for collecting it and forwarding the payment to the government.
Who pays it:
If you are over 16 and flying from a UK airport APD will be paid upon booking and will be included in the cost of your flight. The charge is applicable on all planes over 5.7 tonnes.
The amount you will pay will be dependent on the destination and the category of travel:
The three categories are:
- Reduced rate – Economy
- Standard rate – premium economy, business or first-class
- Higher rate – private jets
There is no extra cost if the flight has a better seating policy available on a ‘first come first served’ policy’ that isn’t considered to be a separate class. – window or door seat for instance
How is air duty calculated?
Air duty is calculated from several factors such as:
- Class of travel – Economy, business or first class.
- Distance Travelled – Longer distances incur higher charges
- Destination – Costs vary for domestic and international flights and are influenced by the destination’s band (A, B, or C)
- Connected flights – For journeys with multiple flights, the final destination is used to calculate APD
The current rates from 1 April 2024:
| Destination bands | Reduced rate | Standard rate | Higher rate |
| Domestic | £7 | £14 | £78 |
| Band A | £13 | £26 | £78 |
| Band B | £88 | £194 | £581 |
| Band C | £92 | £202 | £607 |
An example of the cost of travellers flying this summer is a family of four who trip to the United States (Band B) where all individuals were over 16 and travelling economy (reduced rate) would cost £352 in APD TAX.
How much is APD increasing?
On April 1, 2024, the new rates of Air Passenger Duty (APD) were introduced, and they are set to rise again in April 2025 in line with the forecast retail price index.
| Destination bands | Reduced rate | Standard rate | Higher rate |
| Domestic | £7 | £14 | £84 |
| Band A | £13 | £28 | £84 |
| Band B | £90 | £216 | £647 |
| Band C | £94 | £224 | £673 |
These changes mean higher costs for domestic and international flights, with the APD included in ticket prices.
Despite higher charges for private flights and premium seats, OBR data suggests that the majority of APD revenue comes from lower/economy class travellers, costing households an estimated £150 annually. The tax year 2024-25 is expected to raise £4.5 billion through APD.
While the UK’s APD is a unique levy on air travel, as mentioned, other countries impose similar air duty taxes and many popular tourist destinations in Europe, such as Spain and Italy, have implemented a tourist tax collected separately by hotels. These taxes aim to support infrastructure and services for tourists but can also significantly impact the overall cost of a holiday. As with APD, these taxes are often included in the total cost of a trip, adding another layer of expense that travellers need to consider when budgeting for their vacations.
Ridgefield Consulting commented on the rise of APD, stating, “As APD continues to increase, it’s important to be aware of these hidden costs and plan accordingly. Similar to the tourist taxes in other countries, these additional charges can add up quickly, affecting the overall affordability of holidays. By understanding these expenses, travellers can better prepare their budgets and avoid unexpected financial burdens during their trips.”
Ends:
Data sources:
https://www.gov.uk/guidance/rates-and-allowances-for-air-passenger-duty
