Philip Hammond unveils 'Lewis Hamilton tax' on private jet travel to pay for Air Passenger Duty freeze for families flying economy

Philip Hammond and Theresa May
Philip Hammond, the Chancellor, shares a laugh with Theresa May, the Prime Minister during the Budget Credit: PA

A “Lewis Hamilton tax” will see business class fliers and the owners of private jets facing hikes on the cost of flying to pay for a freeze in Air Passenger Duty (APD) for those travelling in economy.

Philip Hammond announced that as of April 2019 the rates of APD applied to short haul flights will be frozen along with the rates applied to long-haul economy flights.

The Chancellor said keeping the rates the same would be paid for by increasing the levy applied to premium class long haul tickets and to travel on private jets.

Campaigners bemoaned the announcement as a “missed opportunity” to cut APD rates and bring them into line with taxes charged in other European countries.

Mr Hammond singled out Mr Hamilton, the Formula 1 world champion who hit the headlines at the start of November over claims that he “avoided” tax on his own jet, as he announced the measures during the Budget.

Lewis Hamilton
Lewis Hamilton, the world champion Formula 1 driver Credit: David Davies/PA

Meanwhile, the Chancellor also confirmed that a railcard for young people will be extended so that it applies to adults aged 26-30 to entitle them to cheaper train tickets.

The measure will be seen as a direct attempt by the Government to appeal to younger voters who flocked to Jeremy Corbyn at the last general election and helped Labour to a better-than-expected set of results.

The Government has faced persistent pressure to slash APD with analysis released in September suggesting that business class fliers in Britain are paying millions of pounds more in the tax than their European counterparts.

Mr Hammond ultimately refused to cut the tax but insisted his decision to maintain APD at its current rate for the majority of passengers would help British families.

Reports at the start of November claimed that Mr Hamilton had “avoided” tax on his private jet with the Paradise Papers apparently showing that he received a £3.3million VAT refund on his £16.5 million Bombardier Challenger 605 plane.

Mr Hammond could not resist a dig at Mr Hamilton as he announced the decision to freeze APD.

He told MPs: “The cost of travel is also an important factor for families and businesses.

Passengers queue in Terminal 5 at London Heathrow Airport
Passengers queue in Terminal 5 at London Heathrow Airport Credit: Luke MacGregor/Bloomberg

“From April 2019, I will again freeze short-haul Air Passenger Duty rates and I will also freeze long-haul economy rates.

“Paid for by an increase on Premium class tickets, and on private jets. Sorry Lewis.”

Under the plans short-haul APD rates for 2019/20 will remain at the same level they have been at since 2012.

The long-haul rate for economy passengers will be frozen at 2018/19 rates while the tax applied to premium economy, business and first class will go up by £16 and £47 for those travelling by private jet.

That means that people flying by private jet will have to pay APD of up to £515 and those flying premium economy, business and first class long haul will have to pay £172.  

Short haul rates will remain at £13 for economy class and £26 for business and first class, while the long-haul economy rate will stay at £78.

A spokesman for the A Fair Tax on Flying Campaign said: “Today’s Budget was a missed opportunity to decisively cut UK Air Passenger Duty by at least 50% to help get Britain Brexit ready, increase UK competitiveness and support greater air connectivity.”

Philip Hammond, the Chancellor waits to pose with the Budget Box outside 11 Downing Street
Philip Hammond, the Chancellor waits to pose with the Budget Box outside 11 Downing Street Credit: Daniel Leal-Olivas/AFP

Mr Hammond also set out plans to offer more young people cheaper rail travel.

He said: “For those who don’t stretch to a private jet, I can announce a new railcard, for those aged 26-30 giving 4.5 million more young people a third off their rail fares.”

The existing railcard scheme applies to 16-25 year olds and full time students.

The cards cost £30 and save users an average of £150 over the course of a year.

The new railcard is expected to be rolled out in Spring 2018.

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