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Finance Act 2014

Section 79: Air Passenger Duty: Rates of Duty from 1 April 2015

Summary

1.This section provides for the number of destination bands to be reduced from four to two by merging bands B, C and D. The new Band B includes destinations that are over 2000 miles from London. The section also provides for the rates of duty for 2015/16 and provides that the higher rate is six times the reduced rate, rather than twice the standard rate. It also makes consequential amendments to the provisions that transferred the setting of long haul rates to the Northern Ireland Assembly and to the Air Passenger Duty (Setting of Rate) Act (Northern Ireland) 2012 (the “NIA Act”).  The changes come into effect in relation to the carriage of passengers beginning on or after 1 April 2015.

Details of the Section

2.Subsection 3 omits the subsections on APD rates to destinations in Bands B and C.

3.Subsection 4 sets the APD rates to destinations that are not in Band A.

4.Subsection 5 sets the APD higher rates and omits the sections on the APD higher rates to destinations in Bands B and C.

5.Subsections 7 to 9 make consequential amendments to the provisions that transferred the setting of long haul rates of APD in Northern Ireland to the Northern Ireland Assembly.

6.Subsection 10 omits Parts 2 and 3 of Schedule 5A which list the destinations in Bands B and C.

7.Subsection 11 makes consequential amendments to the NIA Act to remove references to the sections being omitted by the subsections above.

Background Note

8.Budget 2014 announced that the number of Air Passenger Duty destination bands will be reduced from four to two. This will contribute to the UK's growth opportunities by cutting APD rates on flights to many emerging market destinations such as China, India and Brazil.

9.The higher rate of APD is applied to aircraft with an authorised take-off weight of  20 tonnes or more and equipped to seat fewer than 19 passengers.  These aircraft provide enhanced levels of comfort and will not benefit from the rate cuts as part of the banding reform.

10.The consequential amendments to the NIA Act follow a request from the Northern Ireland Executive to align the NI legislation with the UK legislation. It has no effect on the APD devolved rates which continue to be £0.

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