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Despite claims that they are illegal, the revised rates of Air Passenger Duty (APD) announced in the 2006 Pre-Budget Report came into force today (1 February 2007).

According to the Association of Chartered Certified Accountants (ACCA), a legal expert has claimed that the revised rates of APD are not legal until they are approved in the Finance Bill, due to be published in the spring. However, many air passengers are already being asked to make payment at airports, over the web or automatically through their credit cards.

From 1 February 2007 airlines and travel companies are required to pay the increased rates of duty to the Government and consequently, some airlines are passing the cost onto the passengers. Others are simply absorbing the cost themselves.

Customers who bought their airline tickets before the APD announcement in December 2006, may be asked to pay the duty.

Chas Roy-Chowdhury, head of tax at the ACCA, said: “Reports suggest that consumers are happy to pay the tax as long as it goes towards improving the environment and going towards paying for green issues, rather than into the Treasury’s coffers. However, the claim made today that the tax is illegal is bound to cause further confusion for flyers. It puts them in an awkward situation – should they pay or not? Should they challenge the payment at the airport or risk not getting a flight at all?”

To add to the confusion passengers who booked package holidays before the Chancellor’s announcement in December last year are not expected to pay the tax.

APD, along with insurance premium tax (IPT), was one of two new taxes announced by the Chancellor in the November 1993 Budget. It is a specific duty of excise, under the care and management of HMRC, levied on civil airlines and other aircraft operators on their carriage of passengers on flights from airports in the UK. It came into effect on 1 November 1994.

A lower-rate charge applies for departures on flights to European destinations. A higher-rate charge applies for departures on flights to all other destinations. Passengers arriving at UK airports to change planes and catch another flight are exempt, as are infants, visiting diplomats and foreign armed forces personnel.

The Channel Islands and the Isle of Man are not a part of the UK for APD purposes. The Isle of Man has enacted an APD of its own similar to that of the UK.

The new tax rates, from 1 February 2007, are as follows:

Economy class flights in Europe and UK domestic flights	£10
First class and Business in Europe	£20
Economy class long-haul flights	£40
First and Business class long-haul flights	£8

 Links

HMRC: Guide to air passenger duty

HMRC: 2006 Pre-Budget Report announcement

Association of Chartered Certified Accountants