Business

Tax changes on 1 April: Cheaper long-haul flights

Virgin Atlantic plane Image copyright Getty Images
Image caption Long-haul travel will get cheaper for many passengers

Among the tax changes coming in on 1 April is one that will mean cheaper flights for thousands of people who travel over 4,000 miles.

However, those flying between 2,000 and 4,000 miles will pay more in duty.

As part of other changes, UK companies will pay a reduced rate of Corporation Tax on their profits.

And companies which artificially export profits to other countries will become liable for the Diverted Profits Tax - otherwise known as the Google Tax.

Other changes, involving tax rates, personal allowances, National Insurance (NI) contributions and pensions will come into effect at the start of the next tax year, on Easter Monday.

Air Passenger Duty

From 1 April, the two more expensive bands of the Air Passenger Duty (APD) are being abolished. Band 'C' affects people travelling over 4,000 miles, and band 'D' affects journeys over 6,000 miles.

Band C passengers flying economy class paid £85 each in APD last year, and will now pay £71, a £14 reduction.

Band D passengers paid £97 last year, and will now pay £26 less.

The Treasury said the measure was designed to help boost trade with emerging economic countries like China and Brazil.

It said a family of four flying to India or the Caribbean in economy would save £56 in duty.

However, passengers in band B (2,000 to 4,000 miles) will see APD rise from £69 to £71.

Further reform will happen on 1 May, when children under 12 will no longer have to pay APD. Those under 16 will be exempt from March 2016.

Air Passenger Duty (Economy class)
Journey length Rate for 2014/15 Rate from 1 April 2015
0 - 2000 miles: Band A £13 £13
2001- 4000 miles: Band B £69 £71
4001- 6000 miles: Band C £85 £71
6001 + miles: Band D £97 £71
source: HM Treasury

Passengers on direct long-haul flights whose journey begins in Northern Ireland are exempt from APD.

Corporation Tax

The main rate of Corporation Tax - on company profits - is being reduced from 21% to 20%. This continues the downward trend in the rate, which was at 28% five years ago.

As a result it is thought that the UK's corporation tax rate is now the joint-lowest in the G20 group of countries.

The equivalent tax is 30% in Germany, and 33% in France.

Large and small companies will now pay the same rate on profits above £300,000.

Diverted Profits Tax

Any company with operations in the UK which artificially diverts profits to another country will be liable to pay the Diverted Profits Tax (DPT).

It follows criticism of multi-national companies like Google, Starbucks, Amazon and Apple.

Some of those companies are being investigated by the European Commission for their failure to pay tax in the countries in which they operate.

The tax will be charged at 25% of profits, and is expected to make £25m for the Treasury this financial year, rising to £355m by 2020.

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