Reform of air passenger duty (“APD”) featured large in the Chancellor’s speech as did reforms to the tonnage tax regime and a further freezing of fuel duty in 2022/23. There were no changes to the rates of company car tax which have already been announced for 2022/23 and which will remain frozen until 2024/25. However from 6 April 2022, the van benefit charge and the car and van fuel benefit charges will increase in line with CPI.
Aviation tax reform
From 1 April 2023 the Government will be introducing a new domestic band for APD, covering flights within the UK. In addition, a new ultra-long-haul band will be introduced covering destinations with capitals located more than 5,500 miles from London.
In 2023/24, the economy rate for the domestic band will be set at £6.50. The rates for the short- and long-haul bands will increase in line with RPI, meaning that the short-haul economy rate will remain frozen at £13 and the long-haul economy rate will increase by £3. The economy rate for the ultra-long-haul band will be set at £91, £4 greater than the long-haul band. This applies across the UK except for the direct long-haul rates for Northern Ireland which are devolved.
Vehicle Excise Duty (“VED”)
The Government will increase VED rates for cars, vans and motorcycles in line with RPI from 1 April 2022. To support the haulage sector and pandemic recovery efforts, HGV VED is frozen for 2022/23 and the HGV levy is suspended for another 12 months from August 2022.
Carbon price support (“CPS”) rates
The Government will continue the freeze on CPS rates to maintain a cost of £18 per tonne of carbon dioxide in GB from 2023/24.
Aggregates levy
The Aggregates levy rate for 2022/23 is frozen but will be increased in future via index-linking.
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