Brits jetting off abroad could soon face an additional tax on their flight under the terms of the Labour government’s new post-Brexit deal with the EU.
Sir Keir Starmer agreed a ‘substantial package’ of agreements with Brussels in May this year that includes a commitment to reducing carbon emissions.
This includes a promise to align with the European Union‘s emissions trading scheme (ETS) that will reduce trading friction but is set to force the PM to adopt an additional tax on long-haul flights.
A report by think tank the Resolution Foundation estimates that the move could raise an additional £1.5billion for the Treasury – albeit at an average additional cost of £21 per passenger per flight.
And that comes on top of a rise in air passenger duty announced by Chancellor Rachel Reeves last year: it is set to be £106 on economy class long haul flights and £253 in business and first class.
Since 2012, the EU’s ETS has required airlines to declare their carbon emissions for flights within the European Economic Area against a free allowance.
But rules agreed in 2023 have gradually seen the free allowances replaced with an auction scheme that sees airlines pay for their emissions; global flights outside Europe could also fall under the scheme by 2027.
And the Government is reported to be preparing to align the UK’s own ETS – which covers carbon emissions from all industries, including aviation – with the EU’s as part of the deal inked in May.
Sir Keir Starmer with European Commission president Ursula von der Leyen at the UK-EU Summit in May
The aviation industry is concerned at the potential impact of additional levies at a time when they are facing greater bureaucratic expense
Rachel Reeves announced inflation-busting hikes to air passenger duty last year that come into effect from April, adding to holidaymakers’ headaches
The additional levies, reported by The Times, appear to fly in the face of the Government’s promise in May that its reset with the EU would ‘put more money in people’s pockets’.
The Cabinet Office has stressed that aligning with Europe’s ETS will cut red tape and save businesses from having to pay expensive carbon levies when exporting to the continent.
And the Resolution Foundation itself backs the move, noting: ‘Given the pressing need to set out a substantial revenue-raising package, the budget would seem a good time to pencil in this sensible change.’
But aviation leaders are concerned that the charge – which could rise to as much as £60 by the end of the decade – could spell trouble for already beleaguered airlines.
Operators are braced for significant rises to air passenger duty announced last year by the Chancellor that will see families paying up to 15 per cent more in tax from next April – which prompted Easyjet and Ryanair to slash flights from their schedule.
And airlines are now mandated to add a proportion of expensive sustainable aviation fuel to the mixture used to power their fleets – pushing costs up further.
Tim Alderslade, chief executive of industry body Airlines UK, told the Mail: ‘Any further APD increases risk clipping the wings of one of our UK success stories, making it harder to keep travel affordable for families, businesses and visitors alike.’
The EU is also planning to expand the ETS scheme to cover maritime emissions – meaning the price of a ferry ticket is also likely to shoot up.
A government spokesperson told the Times: ‘We are working together with the EU to implement the package agreed at the UK-EU Summit.
‘We will only agree deals that provide value to the UK and UK industry. Nothing has been agreed, and we will not give a running commentary on ongoing talks.’
The Mail has asked for further comment.
It comes amid reports, first revealed by the Mail, that Rachel Reeves is set to hit drivers of electric vehicles with a new road charging tax.
Drivers of EVs are expected to pay 3p per mile on top of other road taxes in order to offset the inevitable decline in fuel duty amid rising electric car sales.
This would apply even if the car is being driven abroad.
Reeves is set to argue in the Budget that the new tax is fair given that drivers of fossil fuelled cars pay £600 a year on average in fuel duty.
An electric car driver would need to cover 20,000 miles a year to pay the same amount under Labour’s proposal.
