VAT

Does VAT apply to the cost of flights? I'm mindful that, although there seems to be a real lack of sales, VAT is going up in the new year....

[mitchja]

No, not at the moment anyway!!

Although the increase in APD from November will more than make up for not paying higher VAT.

I'll do (and post) some calculations later but my gut instinct is that APD (even allowing for the rise) is a lot less that VAT - especially on UC tickets

Ok I like a challenge / puzzle and this intrigued me.

METHOD

I did dummy bookings for LHR - EWR out on Thurs 3rd Feb 2011 and returning on Tues 8th Feb 2011 so using the VS01/02. I chose the dates at random but it might say reflect an extended weekend away. I avoided any known UK holidays.

I used the 'ordinary' booking engine i.e. did not log into FC or use any of the options to choose a particular fare class.

I then chose both the 'lowest' and 'flexible' options for E, PE and UC. After the price came through I opened the sub windows that diplayed the fare codes (listed) and then the breakdown of 'taxes and fees'

The 'base fare' below is the fare displayed in the booking engine LESS the APD element. (so to get the 'current' fare add the base fare and the APD element.

I then calculated VAT @ 20% on the base fare. I calculated it on the entire base fare and did not exclude any of the seperate fees e.g. airport / security fees etc listed. I then calculated VAT @ 6% (there are three rates - zero rated (as fares are now), reduced rate (6%) and standard rate (20%) and this is the second VAT figure. Under EU rules you can only have three VAT rates.

I also calculated the % the APD was of the base fare.

As far as I could tell there were no sale / special offers available.

THE RESULTS

Econ Lowest - N/N

Base Fare - £ 314.47. APD = £ 60.00 / VAT = £ 62.89 / £ 18.87
APD as % of base fare - 19.08%

Econ Flexible - Y/Y

Base = £ 1177.47. APD = £ 60.00 / VAT = £ 235.49 / £ 70.65
APD as % of base fare - 5.10%

PE Lowest - K/K

Base Fare - £ 808.47. APD = £ 120.00 / VAT = £ 161.69 / £ 48.51
APD as % of base fare - 14.84%

PE Flexible - W/W

Base = £ 1854.47. APD = £ 120.00 / VAT = £ 370.89 / £ 111.27
APD as % of base fare - 6.47%

UC Lowest - Z/Z

Base Fare - £ 2063.47. APD = £ 120.00 / VAT = £ 412.69 / £ 123.81
APD as % of base fare - 5.82%

UC Flexible - J/J

Base = £ 5496.47. APD = £ 120.00 / VAT = £ 1099.29 / £ 329.79
APD as % of base fare - 2.18%

LIMITATIONS

The above example is obviously only one route. I have not looked at fares to flighs going to APD zones C and D destinations (e.g HKG and SYD) but I don't belive they would show that much variaion.

Sale fares would have different ratios of APD to base fare and affect the VAT calculations and comparisons. As would say going E out and PE back.

CONCLUSION

IF 20% VAT were applied, APD works our cheaper (though only by £ 2.89) only on the lowest Econ Fare (N/N)

IF 6% VAT rate were applied, APD is cheaper for the lowest Econ (N/N) and BOTH PE Fares N/N and K/K fares.

Generally APD is not that large part of the fare and its not reasonable to complain that it is responsible for the bumping up of prices that we have seen.

To compare, the fuel supplements are £ 111 / £ 131 / £ 161 for the above flights.

Ok I like a challenge / puzzle and this intrigued me.

METHOD

I did dummy bookings for LHR - EWR out on Thurs 3rd Feb 2011 and returning on Tues 8th Feb 2011 so using the VS01/02. I chose the dates at random but it might say reflect an extended weekend away. I avoided any known UK holidays.

I used the 'ordinary' booking engine i.e. did not log into FC or use any of the options to choose a particular fare class.

I then chose both the 'lowest' and 'flexible' options for E, PE and UC. After the price came through I opened the sub windows that diplayed the fare codes (listed) and then the breakdown of 'taxes and fees'

The 'base fare' below is the fare displayed in the booking engine LESS the APD element. (so to get the 'current' fare add the base fare and the APD element.

I then calculated VAT @ 20% on the base fare. I calculated it on the entire base fare and did not exclude any of the seperate fees e.g. airport / security fees etc listed. I then calculated VAT @ 6% (there are three rates - zero rated (as fares are now), reduced rate (6%) and standard rate (20%) and this is the second VAT figure. Under EU rules you can only have three VAT rates.

I also calculated the % the APD was of the base fare.

As far as I could tell there were no sale / special offers available.

THE RESULTS

Econ Lowest - N/N

Base Fare - £ 314.47. APD = £ 60.00 / VAT = £ 62.89 / £ 18.87
APD as % of base fare - 19.08%

Econ Flexible - Y/Y

Base = £ 1177.47. APD = £ 60.00 / VAT = £ 235.49 / £ 70.65
APD as % of base fare - 5.10%

PE Lowest - K/K

Base Fare - £ 808.47. APD = £ 120.00 / VAT = £ 161.69 / £ 48.51
APD as % of base fare - 14.84%

PE Flexible - W/W

Base = £ 1854.47. APD = £ 120.00 / VAT = £ 370.89 / £ 111.27
APD as % of base fare - 6.47%

UC Lowest - Z/Z

Base Fare - £ 2063.47. APD = £ 120.00 / VAT = £ 412.69 / £ 123.81
APD as % of base fare - 5.82%

UC Flexible - J/J

Base = £ 5496.47. APD = £ 120.00 / VAT = £ 1099.29 / £ 329.79
APD as % of base fare - 2.18%

LIMITATIONS

The above example is obviously only one route. I have not looked at fares to flighs going to APD zones C and D destinations (e.g HKG and SYD) but I don't belive they would show that much variaion.

Sale fares would have different ratios of APD to base fare and affect the VAT calculations and comparisons. As would say going E out and PE back.

CONCLUSION

IF 20% VAT were applied, APD works our cheaper (though only by £ 2.89) only on the lowest Econ Fare (N/N)

IF 6% VAT rate were applied, APD is cheaper for the lowest Econ (N/N) and BOTH PE Fares N/N and K/K fares.

Generally APD is not that large part of the fare and its not reasonable to complain that it is responsible for the bumping up of prices that we have seen.

To compare, the fuel supplements are £ 111 / £ 131 / £ 161 for the above flights.

Thanks for that magnum opus tonty. You really need to get out more )

Wow tonty, thanks for all that!

Re sales though, I see the only sales going on currently are for India or Africa, but find myself wondering ifthere'll be one if BA does finally end its strike position. That ballot's a way of though, so may have to bite the bullet, swallow hard and book some flights.

i dont ever see VAT shown seperatley on etickets, do virgin issue VAT invoices ? be handy to reclaim it on business trips

[Neil]

i dont ever see VAT shown seperatley on etickets, do virgin issue VAT invoices ? be handy to reclaim it on business trips

You don't pay VAT on airline tickets, you are taxed in another way, which is the APD.

i dont ever see VAT shown seperatley on etickets, do virgin issue VAT invoices ? be handy to reclaim it on business trips

You don't pay VAT on airline tickets, you are taxed in another way, which is the APD.

There's a hole in my bucket, dear Neil, dear Neil...

tonty - ever considered taking up a hobby?

[Neil]

There's a hole in my bucket, dear Neil, dear Neil...

?|

[
tonty - ever considered taking up a hobby?

GGGGGGGGGRRRRRRRRRRRRRRRRRRRRRRRRR

Well I think I put to bed the canard of APD being responsible for fare increases and that we (as pax) would be better off with VAT instead of APD being charged on tickets.

Was an interesting exercise - sort of thing young Tizer should be doing as homework !

Was an interesting exercise - sort of thing young Tizer should be doing as homework !

Don't be ridiculous. She's far too busy doing my accounting year end.

Don't be ridiculous. She's far too busy doing my accounting year end.

Is that the modern equivalent of sending her down t'mine or picking up fluff from under the looms at t'mill ?