Business tax – guidance

Air Passenger Duty

Find out if you have to pay Air Passenger Duty, the rates and how to register and submit returns.

Overview

You need to register and pay Air Passenger Duty (APD) if you operate a fixed wing aircraft from any UK airport that:

  • weighs 5.7 tonnes or more
  • is fuelled by kerosene
  • carries passengers whether they’ve paid for the flight or not

Standard registration

You can register any time before your flights begin. The latest you can register is 7 days after a chargeable flight taking place. If you don’t register, HM Revenue and Customs (HMRC) may issue you with a penalty.

If your business is based outside of the UK, you must appoint a fiscal representative. This can sometimes be just for administrative purposes. If you don’t appoint someone, your handling agent may be made jointly and severally liable for future debts. You may also be issued with a penalty.

You need to complete and return Air Passenger Duty form APD1 to register.

Notify changes or cancel your registration

If any of your business registration details change you must notify HMRC within 30 days (or within 7 days for fiscal representative changes). You should provide as much supporting information as possible.

You should return your certificate of registration with any amendments clearly marked and signed to the APD Central Collection Unit.

If you cease to operate chargeable flights you must notify HMRC in writing.

The occasional operator scheme

You are eligible for the occasional operator scheme if you:

  • are likely to make no more than 12 flights a year from UK airports
  • your duty liability for the year won’t exceed £5,000

You don’t have to register for APD in advance and can pay APD for flights made over a 24 hour period by completing the combined registration and notification form within 7 days of the departure date.

Rates

You pay APD for each chargeable passenger you carry. The passenger will fall into a specific tax band dependent on their final destination.

Until 31 March 2015 there are 4 destination bands (A,B,C and D).

From 1 April 2015 there will only be 2 bands. Band A will remain the same and all other destinations will be merged into band B.

For each band there are 3 rates of duty, depending on the passenger’s class of travel:

  • reduced – applies to passengers that travel in the lowest class of travel, unless their seat pitch is more than 40 inches
  • standard – applies to passengers in any class other than the lowest class of travel or where seat pitch is more than 40 inches (unless higher rate conditions are met)
  • higher – applies to passengers that travel in an aircraft that weighed more than 20 tonnes and is equipped to carry fewer than 19 passengers

See a breakdown of Air Passenger Duty rates.

Exemptions

There are some people and flights exempt from APD. A full list of exemptions is provided in Excise Notice 550: Air Passenger Duty.

The exemptions that apply to children will change on 1 May 2015.

Rates for flights leaving from Northern Ireland

There are different rates that apply for passengers on certain flights leaving Northern Ireland airports.

Special accounting schemes

If you can’t calculate your APD based on actual passenger numbers from your existing systems you may need to use a ‘special accounting scheme’. Before you can use this type of scheme, you must have HMRC approval.

Records you must keep

Usually, you’ll need to keep business records for 6 years and they’ll need to be available for HMRC to see them whenever necessary. You can use any format as long as copies can be easily produced.

The records you must keep must demonstrate that the amount you’ve declared on your return is a true and fair account of your APD liability.

As well as your normal business records, you need to keep:

  • an APD account detailing the monthly summary of passengers carried and the APD due
  • other specific records such as documents proving passengers aren’t chargeable for any reason, flight interruption manifests etc.

You may also need to keep additional records if you are allowed to work out your duty using a ‘special accounting scheme’.

Returns and payments

HMRC will send you or your fiscal representative a return, usually monthly, once you’re registered. You should complete and send back the return with payment for any duty due.

Your deadline for submitting the return will be on the front of the return. Your payment must also be received by this date. If the deadline is a bank holiday or weekend, the return and payment should reach HMRC by the last working day before the deadline.

If your return and payment are late, HMRC may issue a penalty.

HMRC can ask you to pay a cash deposit or bond if they think there’s a risk you won’t pay your tax or duty on time.

Incorrect returns

If you make a mistake, HMRC has issued guidance on how you can correct errors on returns.

If the amount you pay is later found to have been incorrect and too low, HMRC will charge you interest. Depending on the circumstances of the mistake, you may also be issued with a penalty.

Annual accounting

An annual accounting scheme is available, which lets you make just one return each year. To qualify for the scheme the annual total of APD your business is likely to pay must be £500,000 or less.

To apply you should write to the APD Central Assurance Team.

Appeal a penalty

You can appeal a penalty by asking for an independent review. If you’re still unhappy with the outcome, you can take your complaint to a tribunal.

Reasonable excuses

HMRC will look at your case on an individual basis if you have a reasonable excuse for making the error. If it agrees you have a reasonable excuse, you won’t have to pay the penalty.