Policy paper

Air Passenger Duty: rates from 1 April 2026 to 31 March 2027

Published 30 October 2024

Who is likely to be affected

Airlines and other aircraft operators and their passengers.   

General description of the measure

The measure sets the rates of Air Passenger Duty (APD) for the year 2026 to 2027. Rates will increase by forecast Retail Price Index (RPI) and will be further increased to account for previous high inflation that has not been reflected in previous years’ increases. The higher rates that apply to the larger private jets will increase by an additional 50%.

For the tax year 2027 to 2028 and in subsequent years, rates will be rounded to the nearest penny.  

Policy objective

This measure helps to account for the real-terms fall in APD rates given rate increases have fallen behind inflation in recent years due to differences between forecast and actual RPI.

The additional increase to the higher rates ensures that APD costs as a proportion of the hiring costs for private jets are more in line with APD on commercial airlines as a proportion of airfares. The increase to the higher rate will ensure that users of private jets continue to make a fair contribution to the public finances.

Rounding APD rates to the nearest penny rather than the nearest pound from 2027 to 2028 onwards ensures that all rates rise by equal proportions.

All of the changes ensure that airlines and other aircraft operators continue to make a fair contribution to the public finances.

Background to the measure

The APD rates for the year 2026 to 2027 were announced at Autumn Budget 2024 to give industry sufficient advance notice of changes, given airline tickets tend to be purchased well in advance. APD is one of a very small number of taxes where rates are set more than a year in advance, using forecast RPI.

Detailed proposal

Operative date

The rates for the tax year 2026 to 2027 will have effect in relation to the carriage of chargeable passengers on or after 1 April 2026.

Current law

Section 30 of Finance Act 1994 sets out the rates of APD.

Proposed revisions

Legislation will be introduced in Finance Bill 2024-25 to amend section 30 of Finance Act 1994. The rates will be as follows:

From 1 April 2026

Bands (distance in miles from London)	Reduced rate (lowest class of travel)	Standard rate (1) (other than the lowest class of travel)	Higher rate (2)
Domestic band	£8	£16	£142
Band A (0 to 2,000 miles)	£15	£32	£142
Band B (2,001 to 5,500 miles)	£102	£244	£1,097
Band C (over 5,500 miles)	£106	£253	£1,141

(1) If any class of travel provides a seat pitch in excess of 1.016 metres (40 inches) the standard rate is the minimum rate that applies. (2) The higher rate applies to flights aboard aircraft of 20 tonnes and above with fewer than 19 seats.

Summary of impacts

Exchequer impact (£ million)

2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030
—	—	+ 520	+ 585	+ 650	+ 720

These figures are set out in table 5.1 of Autumn Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2024.

Economic impact

This measure is not expected to have any significant macroeconomic impact.

The costing includes a behavioural effect to account for the change in flights taken resulting from the change in the tax rates.

Impact on individuals, households and families

APD is a tax on airlines and aircraft operators. The government’s understanding is that airlines and aircraft operators ordinarily pass the cost of APD through to the consumer in prices, although this is a commercial decision for the airline or operator. This measure may therefore impact individuals who travel by air, who may see an increase in air fares. Those individuals who travel in larger more luxurious private jets may see a bigger increase. Children under 16 years old on the date of the flight, and in the lowest class of travel, are exempt. Children under 2 years old without a seat are exempt from APD, in whatever class they travel. Customer experience is expected to stay broadly the same because this measure does not change how individuals interact with HMRC.

This measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that this measure will have any impacts on those in groups sharing protected characteristics. APD is a tax on airlines and aircraft operators. The government’s understanding is that airlines and aircraft operators ordinarily pass the cost of APD through to the consumer in ticket prices and, for private jets, hiring costs. These are commercial decisions for the airline and aircraft operator. The government has limited evidence on the characteristics of people purchasing airline tickets. However, given the scale of the proposed rate changes, any impact is expected to be small.

Impact on business including civil society organisations

This measure is expected to have a negligible impact on approximately 600 airlines and aircraft operators. One-off costs include familiarisation with the changes and updating systems to include the new rates. It is not expected that there will be any continuing costs.

There is expected to be no impact on civil society organisations.

HMRC customer experience is expected to stay broadly the same because this measure does not change how businesses interact with HMRC.

Operational impact (£ million) (HMRC or other)

HMRC will not incur any costs making these changes.

Other impacts

We expect the measure to have a negligible impact on the environment. Other impacts have been considered and none has been identified.

Monitoring and evaluation

The measure will be monitored through information collected from receipts and APD returns.

Further advice

If you have any questions about this change, contact Ann Little by telephone: 03000 586 096, or email: [email protected].