18 March 2015 at 14.15 GMT
Chancellor George Osborne made no mention of Air Passenger Duty in today’s Budget, but Treasury Budget documents confirm APD will rise at the rate of the Retail Price Index (RPI) from April next year.
Changes to APD from this spring, already announced, will see the overall tax take from the duty fall by about £250 million in the next financial year.
But the Treasury still expects to extract £3.9 billion in annual duty from the tax by 2018-19, up from £3.2 billion in the current year.
APD will be charged at two rates rather than four from the start of April, with a short-haul economy rate of £13 and £71 for medium and long-haul flights.
Fares for children under 14 will no longer be subject to APD from May.
The Chancellor made few direct references to travel in his final Budget before the general election on May 7.
However, his pledge to “ensure Britain is the global centre for the sharing economy” could have repercussions for sections of the travel industry.
Budget documents state the Government’s intention to “enable government employees to use sharing economy solutions to book accommodation and transport when travelling on official business”.
Osborne promised “new investment in transport infrastructure for London”, “a comprehensive transport strategy for the North” and “over £7 billion of transport investment” for the South West.
A cut in corporation tax to 20% and review of business rates were calculated to please businesses.
The Chancellor appealed to households by announcing a freeze on fuel duty, a reduction in beer duty and a rise in the personal tax allowance.
Osborne announced a so-called Google Tax on companies seeking to avoid taxes by registering overseas would be introduced next week and apply from next month.
Raising APD by the RPI rate is likely to mean an above-inflation rise next year.
RPI has been consistently higher than the official Consumer Price Index (CPI) since 2009 and the former rate is no longer used by the Government as an official measure of inflation.
The annual RPI rate in January of this year was 0.5% against a CPI rate of 0.3%.
Sourced from Travel Weekly