Treasury Consultation on Aviation Duty


The Government is committed to changing the commercial aviation tax regime from a “per-passenger” tax to a “per-plane” tax.  The current Air Passenger Duty would go to be replaced by a tax on each take-off, regardless and of how many passengers are aboard.  It is said that the aim is to ensure that the “aviation makes a greater contribution to covering its environmental costs, while ensuring that a fair level of revenue continues to be raised from the sector in order to support public services”


It is a tax Brian.


This comes hot on the heels of a consultation on how to apply the ending on 1 November 2008 of the derogation that allowed a reduced rate of fuel duty on private flying.  Although the consultation on that has closed, it is a linked subject and Roger Hopkinson and Graham Newby have again been in the thick of negotiations with the Treasury to try to contain the impact of all this.  As a result, of their efforts, the Treasury recognises that private flying is already taxed more than commercial flying and proposes to take this into account when introducing this new aviation tax.  


The Treasury proposes that all fixed wing aircraft below 5.7 tonnes MTOM and all helicopters would be exempt from the per-plane tax but that all these aircraft would be subject to fuel duty.  The broad assumption is that aircraft over 5.7 tonnes are commercial and would pay the per-plane tax but no fuel tax and aircraft below 5.7 tonnes are not commercial and would pay fuel tax but no per-plane tax.  The only exemption would be for international flights where the existing fuel drawback arrangement would continue.  This is good in that it fends off the take-off tax for our sort of aircraft but whilst the impact on Avgas aircraft will be modest the impact on small diesel and turbine aircraft and helicopters will be significant.  We were not able to move the Treasury on this and the changes in fuel duty will come in regardless.  What has been achieved is the use of that to fend off any further taxation from the new aviation duty. 


The consultation is open until 24 April 2008 and the Treasury documents are here.

Whilst you are free to comment to the Treasury direct, you are also welcome to send your views to me John Brady to be included in the LAA corporate response.  Please note that whilst this consultation takes the fuel duty issue into account, the consultation on that has closed.  This consultation relates only to the change from Air Passenger Duty.  We think that the proposal is the best that could be achieved so we recommend you accept it.


John Brady
5th March 2008