Tax position on Jet Fuel
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Tax position on Jet Fuel
The Treasury Minister, John Healey, confirmed yesterday that the European Commission has rejected the UK Government’s application to renew the UK’s derogation on red diesel for recreational use (mainly boats). Hence it will no longer be taxed at the lower rate and will cost more like road fuel.
Is this also likely to affect the price of A1 for recreational use ?
Is this also likely to affect the price of A1 for recreational use ?
I'm no tax expert but I'm not sure how it could impact on the tariff on JETA1.
How could you stipulate that the JET A1 is for 'recreational purposes' as opposed to 'commercial purposes'?
In the onshore charter/hire business, the same aircraft is often used for both commercial and recreational (ie SFH) purposes. It would even be hard to charge private users a 'recreational tariff' because plenty of PPLs use their aircraft for 'commercial purposes'.
How could you stipulate that the JET A1 is for 'recreational purposes' as opposed to 'commercial purposes'?
In the onshore charter/hire business, the same aircraft is often used for both commercial and recreational (ie SFH) purposes. It would even be hard to charge private users a 'recreational tariff' because plenty of PPLs use their aircraft for 'commercial purposes'.
Last edited by Bravo73; 8th Dec 2006 at 12:11.
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Be very difficult to increase the tax on jet a1. An increase of 12.5% to the full 17.5% would cripple the british aviation industry and mightily damage Big Airways. Airlines arriving here would have a different tax status and would be able to undercut British firms massively, leading to huge job losses.
Though then again our present leaders would probably do it for a few votes or an election expenese donation
Though then again our present leaders would probably do it for a few votes or an election expenese donation
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I agree with you both. From what I hear in the press regarding the red diesel, it seems commercial fishing boats are OK but pleasure craft are not.
Assuming the same would apply with A1, private a/c would get stung but not commercial.
Begs the question of where the divide is. Training, SFH ?
I don't have any answers, just wondering if anybody had heard anything.
Assuming the same would apply with A1, private a/c would get stung but not commercial.
Begs the question of where the divide is. Training, SFH ?
I don't have any answers, just wondering if anybody had heard anything.
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By my calculations if they changed from 12.5% to the 'full' 17.5%, an hour's hire of a 206 would go up by a stonking £6.40. Outrageous!
(Edited - yes, I got the sums wrong first time).
(Edited - yes, I got the sums wrong first time).
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Hilico;
Well edited that man! You are right, There is not a great difference for us, the largest effects are with the big carriers. Just put the same sums to a fleet of 260 airliners from the A320 up to the B747-400 and the figures are suddenly huge. I know that you can get a draw back if you are taking the fuel overseas, but the smaller end of the fleet will still be doing the internal work and the bills will mount up.
According to the ex Mrs VH (who worked for the treasury at the time) one of the reasons for the low duty on jet a1 was to allow UK carriers to compete on a more level playing field. The legislation was framed during the reign of Mrs Thatcher when Lord King (who she called her favourite business man) was in Charge at BA.
BA is one of few European national carriers with no government subsidies. A price hike of this nature could bring it's profits right down and possibly wipe them out altogether.
VH
Well edited that man! You are right, There is not a great difference for us, the largest effects are with the big carriers. Just put the same sums to a fleet of 260 airliners from the A320 up to the B747-400 and the figures are suddenly huge. I know that you can get a draw back if you are taking the fuel overseas, but the smaller end of the fleet will still be doing the internal work and the bills will mount up.
According to the ex Mrs VH (who worked for the treasury at the time) one of the reasons for the low duty on jet a1 was to allow UK carriers to compete on a more level playing field. The legislation was framed during the reign of Mrs Thatcher when Lord King (who she called her favourite business man) was in Charge at BA.
BA is one of few European national carriers with no government subsidies. A price hike of this nature could bring it's profits right down and possibly wipe them out altogether.
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The current tax on jet A1 is 5% not 12.5% as you seem to think. Therfore, the increase is from 5% to 17.5% an Increase of 12.5% or 3.5 times or 350% of the original!
So In the scheme of things this represents a massive increase in the duty operators pay. If your annual JetA1 fuel bill is say £100k then you'd currently pay out £5k in tax, if this legislation is passed then on the same £100k of fuel you'd pay £17.5k a massive increase in tax, A bit more of an issue when seen like this instead of "my 1 hour in a 206" don't you think?
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According to an e mail I received today
On Nov 30th 2006, the EU refused to renew the various exemptions that tax UK Avgas at 50% of the car petrol rate, and UK Jet A1 at 0%, for private pleasure flying, effective Jan 1 2007. The UK had applied for the exemptions to continue, but was turned down.
This could lead to increases of 30 pence per litre for Avgas and 20 pence per litre for Jet A1, used for private pleasure flying, if the full road fuel tax is imposed.
However the UK government does not have to impose the full road fuel tax. They can choose to impose the EU minimum tax which would see a increase of 2 pence per litre for Avgas, and .02 pence per litre for Jet A1.
On Nov 30th 2006, the EU refused to renew the various exemptions that tax UK Avgas at 50% of the car petrol rate, and UK Jet A1 at 0%, for private pleasure flying, effective Jan 1 2007. The UK had applied for the exemptions to continue, but was turned down.
This could lead to increases of 30 pence per litre for Avgas and 20 pence per litre for Jet A1, used for private pleasure flying, if the full road fuel tax is imposed.
However the UK government does not have to impose the full road fuel tax. They can choose to impose the EU minimum tax which would see a increase of 2 pence per litre for Avgas, and .02 pence per litre for Jet A1.
