Business-class fliers hit with £400m tax bill

British business-class fliers are paying £400million more in tax than their European counterparts, new analysis has shown, as campaigners urge the Government to slash Air Passenger Duty, which on business class flights in the UK is charged at double the rate for economy flights.

BRITISH business-class fliers are paying £400million more in tax than their European counterparts, new analysis has shown, as campaigners urge the Government to slash the duty.

Air Passenger Duty (APD) on business class flights in the UK is charged at double the rate for economy flights, costing up to £146 per flight. New analysis of the rates by A Fair Tax on Flying Campaign shows business travellers flying from Britain in 2016 forked out £400 million more than if they had been paying the EU average levy. APD is charged at two rates in the UK: one that is applied to all short-haul flights of less than 2,000 miles and one for long-haul flights.

In Britain, anyone flying a short distance in economy class will pay APD of £13, and £26 if flying business class. Meanwhile, on long-haul flights passengers have to pay £73 or £146 in tax, respectively. But in Germany the tax is significantly lower, with a flat levy worth £5.68 applied to short-haul flights and £31.95 for longer trips.

The average rate for the EU for economy-class short-haul flights is just over £2, and just shy of £7 for long-haul. Campaigners have labelled APD as a “tax on trade” amid fears it could place the UK at a “severe competitive disadvantage” as the nation seeks to reposition itself after Brexit.

Campaigners are calling on Philip Hammond, the Chancellor, to cut it in half when he delivers his budget on Nov 22, to bring it in line with levies charged in Germany.

Karen Dee, a spokeswoman for the campaign, said: “If the Chancellor wants to signal that Britain is ‘open for business’, what better way than cutting this tax by at least 50 per cent to bring us in line with the next highest of our European trading rivals, Germany. UK APD is among the highest tax of its kind anywhere in the world, and is the highest in the EU by a significant margin. It puts the UK economy at a competitive disadvantage in the very markets we need to trade with post-brexit when compared to our European neighbours.

“No matter which EU country you compare us to, the result is the same – UK businesses are being unfairly punished. This tax on trade hits British business fliers heading out to secure the increased trade we need as Brexit gets ever closer.” The campaign’s research suggests that people travelling for work from the UK faced an additional tax burden of more than £325 million when compared with economies such as Italy and France and more than £275million compared with Germany.

The campaign’s research focused on the cost of APD to UK businesses but the duty is paid by the vast majority of air passengers and cutting it would also reduce the cost of going on holiday.

The power to set APD has been devolved to Scotland, with plans being considered to cut the tax before abolishing it completely north of the border.