Ouch: a family of five flying to Thailand from April onwards in premium economy will pay £1,000 in tax for the privilege of taking off from the UK in a slightly more comfortable seat.
Almost three decades after Air Passenger Duty was launched – at a bargain £5 for European flights, £10 for long-haul – the tax system for flights from and within the UK is changing yet again.
The man who invented the UK’s tax on aviation was the-then Tory chancellor, Ken Clarke. APD has seduced all his successors ever since. The flight tax is absurdly easy to collect, because the airlines do all the hard work and send in the cheques every month.
APD is also impossible to avoid. Or is it? The rules are complex but travellers can certainly work them to their advantage.
First a quick reminder of what changes on 1 April. Cash may be tight for the Treasury, but 12 weeks from now the government will surrender £58m by cutting tax on flying within the UK. The rate of Air Passenger Duty for domestic flights halves to £6.50, with the leading beneficiaries being travellers shuttling between Edinburgh and London. It will lure passengers from rail to air.
Some of the cash will be clawed back by raising long-haul APD, and in particular penalising journeys in anything-better-than-economy for far-flung flights.
A new higher-tax band applies for flights to countries whose capitals are over 5,500 miles from London. That includes the key Asian hubs of Bangkok, Kuala Lumpur and Singapore – but nowhere in China or Brazil, because the capitals are under 5,500 miles even though key arrival points including Shanghai and Sao Paulo are significantly further.
The penalty for ultra-long-haul flights is not hugely significant: only 4.5 per cent more than the sub-5,500-mile tax, which itself is up 3.5 per cent on last year. But it takes the rate for premium economy (or business, or first) to £200 for passengers of all ages.
While only people 16 and over pay APD in the most basic class, for anything better the tax applies for anyone aged two and above. That family of five travelling to Thailand, if all the kids are in the range 2-15, would pay just £182 in economy – or 5.5 times as much for anything better.
So here are some ways legally to avoid tax.
Break your journey
APD is calculated on your final ticketed destination. So if you are flying Birmingham-Amsterdam-New York on a through ticket on KLM (or any airline combination), you will pay £87 in tax. But build in a stopover of 24 hours or more, and you pay only £13 for the first segment. For a couple, the £148 saving will probably pay for a cheeky city break.
Going south and east, Istanbul is a particularly good option, given the glories of the city and the range of possible destinations in Africa and Asia.
Split your ticket
A variant, which I use to the US, is to buy a cheap one-way to Dublin airport and a separate onward ticket from there. You must allow plenty of time to connect – there is no refund if you miss the onward flight.
The only other time that buying a separate ticket has proved worthwhile via Continental Europe was flying to Kazakhstan, when it was oddly much cheaper to fly from Brussels; I caught Eurostar and paid nil APD.
Start in Inverness
Bizarrely, APD is zero for flights from the city in northern Scotland. It would make some sense for hops to the Scottish islands, or to other UK cities, because of the challenging location. Yet the exemption applies to destinations anywhere in the world.
If that family of five lived in Edinburgh or Glasgow, they could drive to Inverness and fly via Heathrow on British Airways or Amsterdam on KLM to their final destination.
Some English travellers even find it worthwhile to fly to Inverness and travel on a fresh ticket onwards from there. Which would be a perfect example of a tax encouraging the very behaviour it was intended to reduce.
